Question

What will be the compound interest on Rs 4000 in two years when rate of interest is 5% per annum?

Answer 1

$$\begin{gathered} \mathrm{We}\mathrm{know}\mathrm{that}\mathrm{amount}\mathrm{A}\mathrm{at}\mathrm{the}\mathrm{end}\mathrm{of}\mathrm{n}\mathrm{years}\mathrm{at}\mathrm{the}\mathrm{rate}\mathrm{of}\mathrm{R}\%\mathrm{per}\mathrm{annum}\mathrm{is}\mathrm{given}\mathrm{by}\mathrm{A}=\mathrm{P}{\left(1+\frac{\mathrm{R}}{100}\right)}^{\mathrm{n}}. \\ \mathrm{Given}: \\ \mathrm{P}=\mathrm{Rs}4,000 \\ \mathrm{R}=5\%\mathrm{p}.\mathrm{a}. \\ \mathrm{n}=2\mathrm{years} \\ \mathrm{Now}, \\ \mathrm{A}=4,000{\left(1+\frac{5}{100}\right)}^2 \\ =4,000{\left(1.05\right)}^2 \\ =\mathrm{Rs}4,410 \\ \mathrm{And}, \\ \mathrm{CI}=\mathrm{A}-\mathrm{P} \\ =\mathrm{Rs}4,410-\mathrm{Rs}4,000 \\ =\mathrm{Rs}410 \end{gathered}$$