Question

A man borrowed Rs.$20,000$ for $2$ years at $8$ % per year compound interest. Calculate the compound interest of two years.

Answer 1

Simple Interest $I=\frac{PNR}{100}$
Here for first year,
$P=$ Rs. $20,000$
$N=1$ year
$R=8\%$
So, Interest at the end of 1st year is

$I=\frac{20,000\times 1\times 8}{100}=Rs1,600$
So, for second year,
$P=$ Rs. $20,000+$ Rs. $1,600=$ Rs. $21,600$
$N=1$ year
$R=8\%$
$I=\frac{21,600\times 1\times 8}{100}=$ Rs. $1,728$
So, compound interest for two years $=$ Rs. $1,600+$ Rs. $1,728=$ Rs. $3,328$