Question

Find the amount and the compound interest on 2000 at 10 % p.a for 2 years, compounded annually.

Answer 1

It is given that
Principal (P) = 2000
Rate of interest = 10% p.a
Period (n)= $2\frac{1}{2}$ years
We know that
Amount = $P(1+r/100)$
Substituting the values
= $2000(1+10/100{)}^2(1+10/(2\times 100))$
By further calculation
= $2000\times 11/10\times 21/20$
So we get
= $2541$
Here
Interest = A - P
Substituting the values
= $2541-2000$
= $541$