Question

To start a business Shalaka has taken a loan of $Rs.8000$ at a rate of $10\frac{1}{2}\%$ p.a. After two years how much compound interest will she have to pay?

Answer 1

Here, Principal, $P=Rs.8000;$ $R=10\frac{1}{2}=\frac{21}{2}\%$ ; $N=2$ years

Amount is given by the formula

$A=P(1+\frac{R}{100}{)}^N$

$=8000(1+\frac{\frac{21}{2}}{100}{)}^2$

$=8000(1+\frac{21}{200}{)}^2$

$=8000(\frac{221}{200}{)}^2$

$=Rs.9768.20$

$\therefore$ Compound Interest after 2 years,

I = Amount - Principal

$=9768.20-8000=Rs.1768.20$
Hence, she will have to pay a Compound interest of $Rs.1768.20$ after $2$ years.