Question

At the rate of 12% per annum for 2 years 4 months at 7500 rupees, find the compound interest in the nearest rupee. How is this interest calculated on an annual basis?​

Answer 1

To find : The compound interest on the nearest rupee on 7500 for 2 years 4 months at 12% per annum reckoned annually ?

Solution :

Applying compound interest formula,

A=P(1+r)^tA=P(1+r)t

Where, P is the principal P=Rs.7500

r is the interest rate r=12%=0.12

t is the time t=2 years 4 months

Converting into whole year,

2 years + \frac{4}{12}124 year = \frac{7}{3}37 year

Substitute the values,

A=7500(1+0.12)^{\frac{7}{3}}A=7500(1+0.12)37

A=7500(1.12)^{\frac{7}{3}}A=7500(1.12)37

A=7500(1.3026)A=7500(1.3026)

A=9770.19A=9770.19

Compound interest = Amount - Principal

Compound interest = Rs.9770.19- Rs.7500

Compound interest = Rs.2270.19

Therefore, the compound interest is Rs.2270.19.