The compound interest on ₹ 3,750 for 2 years at 8% p.a., compounded annually is:

1. ₹ 604

2. ₹ 614

3. ₹ 624

4. ₹ 642

Given,

P = ₹ 3,750

n = 2 years

r = 8%

By formula,

$A = P\Big(1 + \dfrac{r}{100}\Big)^n$

Substituting values we get :

$\Rightarrow A = 3750 \times \Big(1 + \dfrac{8}{100}\Big)^2 \\[1em] \Rightarrow A = 3750 \times \Big(\dfrac{100 + 8}{100}\Big)^2 \\[1em] \Rightarrow A = 3750\times \Big(\dfrac{108}{100}\Big)^2 \\[1em] \Rightarrow A = 3750 \times \Big(\dfrac{27}{25}\Big)^2 \\[1em] \Rightarrow A = 3750 \times \dfrac{729}{625} \\[1em] \Rightarrow A = ₹ 4,374$

Compound interest = Final amount - Initial principal

= ₹ 4374 - ₹ 3750 = ₹ 624.

Hence, option 3 is correct option.