Albert invests Rs 8000 in a fixed deposit scheme at a compound interest rate of 5% per annum, compounded annually, for a period of 2 years. What amount will he receive on maturity of the fixed deposit at the end of 2 years?

Introduction / Context: This is a straightforward compound interest calculation where the principal, rate, and time are given, and we need to find the maturity amount. The question mimics a fixed deposit scenario in which the interest is compounded annually at a rate of 5% for 2 years on a principal of Rs 8000.

Given Data / Assumptions:

• Principal P = Rs 8000.
• Rate of interest r = 5% per annum.
• Time t = 2 years.
• Interest is compounded annually.
• We must find the maturity amount A (principal plus interest).

Concept / Approach: The amount A after t years at compound interest with annual compounding is given by: A = P * (1 + r / 100)^t Here, r = 5 and t = 2, so we use the factor (1.05)^2. Once A is calculated, that is the maturity amount Albert receives from the fixed deposit.

Step-by-Step Solution: P = 8000, r = 5%, t = 2 years. Compute the amount factor: (1 + 5 / 100)^2 = (1.05)^2. (1.05)^2 = 1.1025. Therefore, A = 8000 * 1.1025. A = Rs 8820. So Albert will receive Rs 8820 on maturity.

Verification / Alternative Check: We can also compute year by year. End of year 1: amount = 8000 + 8000 * 5 / 100 = 8000 + 400 = 8400. End of year 2: interest on 8400 = 8400 * 5 / 100 = 420. Final amount = 8400 + 420 = Rs 8820, which matches the earlier calculation.

Why Other Options Are Wrong: Rs. 8620 and Rs. 8520 are lower than the correct maturity amount and ignore full compounding for both years. Rs. 8320 is far too low and would correspond to a lower interest rate or shorter time.

Common Pitfalls: Sometimes students apply simple interest instead of compound interest and compute interest only on the original principal each year. Others may miscalculate (1.05)^2 or multiply incorrectly.

Final Answer: The amount Albert receives on maturity is Rs. 8820.