Question

By using the formula, find the amount and compound interest on:
Rs 10000 for 2 years at 11% per annum compounded annually.

Answer 1

$$\begin{gathered} \mathrm{Principal}\mathrm{amount},P=\mathrm{Rs}.10000 \\ \mathrm{Rate}\mathrm{of}\mathrm{interest},R=11\%\mathrm{per}\mathrm{annum}. \\ \mathrm{Time},n=2\mathrm{years}. \\ \mathrm{The}\mathrm{formula}\mathrm{for}\mathrm{the}\mathrm{amount}\mathrm{including}\mathrm{the}\mathrm{compound}\mathrm{interest}\mathrm{is}\mathrm{given}\mathrm{below}: \\ A=\mathrm{Rs}.P{\left(1+\frac{\mathrm{R}}{100}\right)}^{\mathrm{n}} \\ \Rightarrow A=\mathrm{Rs}.10000{\left(1+\frac{11}{100}\right)}^2 \\ \Rightarrow A=\mathrm{Rs}.10000{\left(\frac{100+11}{100}\right)}^2 \\ \Rightarrow A=\mathrm{Rs}.10000{\left(\frac{111}{100}\right)}^2 \\ \Rightarrow A\mathit{}=\mathrm{Rs}.10000{\left(1.11\times 1.11\right)}^2 \\ \Rightarrow A=\mathrm{Rs}.12321 \\ \mathrm{i}.\mathrm{e}.,\mathrm{the}\mathrm{amount}\mathrm{including}\mathrm{the}\mathrm{compound}\mathrm{interest}\mathrm{is}\mathrm{Rs}12321. \\ \therefore \mathrm{Compound}\mathrm{interest}=\mathrm{Rs}.\left(12321-10000\right)=\mathrm{Rs}.2321 \end{gathered}$$