Question

A sum of Rs. 8000 is invested for 2 years at 10% per annum compound interest.
Calculate:
(i)interest for the first year.
(ii) principal for the second year.
(iii) interest for the second year.
(iv) final amount at the end of second year.
(v) compound interest earned in 2 years.

Answer 1

(i)Here Principal (P)=Rs. 8000
Rate of interest=10%
Interest for the first year= $\frac{8000\times 10\times 1}{100}$
=Rs. 800
(ii) $\therefore$ Amount =Rs. 8000 + Rs.800=Rs. 8800
Thus Principal for the second year=Rs. 8800
(iii) Interest for the second year
$=\frac{8800\times 10\times 1}{100}=Rs.880$
(iv) Amount at the end of second year=Rs. 8800 +Rs. 880=Rs. 9680
(v) Hence compund interest earned in 2 years
=Rs. 9680-Rs. 8000=Rs. 1680