Question

Sangeetha borrowed $8,000$ from Alex for $2$ years at $12\frac{1}{2}$% per annum. What interest did Sangeetha pay to Alex if the interest is compounded annually?

Answer 1

Interest for first year $=\frac{8000\times 25\times 1}{100\times 2}=1000$

Amount after first year $=1000+8000=9000$

Interest for second year $=\frac{9000\times 25\times 1}{100\times 2}=1125$