A borrowed ₹ 2500 from B at 12% per annum compound interest. After 2 years, A gave ₹ 2936 and a watch to B to clear the account. Find the cost of the watch.

For first year :

P = ₹ 2500

T = 1 year

R = 12%

I = $\dfrac{P \times R \times T}{100} = \dfrac{2500 \times 1 \times 12}{100}$ = ₹ 300

Amount = P + I = ₹ 2500 + ₹ 300 = ₹ 2800.

For second year :

P = ₹ 2800

T = 1 year

R = 12%

I = $\dfrac{P \times R \times T}{100} = \dfrac{2800 \times 1 \times 12}{100}$ = ₹ 336

Amount = P + I = ₹ 2800 + ₹ 336 = ₹ 3136.

Given,

After 2 years, A gave ₹ 2936 and a watch to B to clear the account. Let cost of watch be ₹ x.

∴ 3136 = 2936 + x

⇒ x = 3136 - 2936 = ₹ 200.

Hence, cost of watch = ₹ 200.