Question

Calculate the amount and compound interest on 25,000 for 2 years at 8% per annum compounded annually

Answer 1

Amount = Rs 29,160

Compound Interest = Rs 4,160.

Step-by-step explanation:

We have to find the amount and the compound interest on Rs. 25,000 at 8% per annum for 2 years compounded annually​.

Let the Principal sum of money = P

Rate of Interest = R

Time Period = T

Amount of money = A

As we know that Amount formula for compounded annually is given by;

              Amount =  $\text{Principal} \times (1+\text{Rate of Interest})^{\text{Time})}$

                                      Or

                        A = $P\times (1+R)^{T}$

Now, we are given with P = Rs 25,000 , R = 8% p.a. and T = 2 years; we have to find the amount,i.e;

                       A = $25000\times (1+0.08)^{2}$

                       A = $25000 \times (1.08)^{2}$

                       A = $25000 \times 1.1664$

                       A = Rs 29,160

That means Amount = Rs 29,160

Also, Compound Interest formula is given by;

          Amount = Principal + Compound Interest

         Compound Interest = Amount - Principal

                                           = Rs (29,160 - 25,000)

                                           = Rs 4,160

Therefore, amount and the compound interest on Rs 25,000 at 8% per annum for 2 years compounded annually​ are Rs 29,160 and Rs 4,160 respectively.