Question

Can you find out?

Annie deposited 5000 rupees for 2 years in a bank which offers 9% compound interest. How much will she get back after 2 years?

Answer 1

Amount deposited by Annie = Rs.5000

Rate of compound interest = 9%

Number of years, n = 2

Interest for the first year = Rs.5000 ×= Rs.450

Principal for the second year = Amount deposited + interest for the first year

= Rs.5000 + Rs.450

= Rs.5450

Now, the interest for the second year is calculated on the amount Rs.5450.

∴Interest for the second year = Rs.5450 × = Rs.490.50

So, the total interest for 2 years = Rs.450 + Rs.490.50 = Rs.940.50

Thus, the total amount Annie would get after 2 years = Rs.5000 + Rs.940.50 = Rs.5940.50