Question

A reputed bank offers 4% interest rate on a certain sum, interest being compounded annually. A person deposits rs. 2400 at the beginning of the year. At the end of the year, he would have an interest of:

Answer 1

Answer:  $96

Explanation:

The formula to find the compound amount is given by:-

$A=P(1+r)^n$, where P is principal amount  , r is rate of interest and n is time period.                     (1)

Given : A reputed bank offers 4% interest rate on a certain sum, interest being compounded annually. A person deposits rs. 2400 at the beginning of the year.

Put P=2400 , r= 0..04 and n=1 in (1)

$A=(2400)(1+0.04)^1=2496$

i.e. Compound amount after 1 year = $2496

Compound interest = A-P= $2496- $2400=$96

Hence, At the end of the year, he would have an interest of $96.