Question

Calculate the compound interest on $800 for 2 years at 5% pa. compounded annually.​

Answer 1

Compound Interest = $82

Explanation:

Given:

Principal = $800

No.of Years = 2 years

Rate of Interest = 5%

To find:

Compound Interest =?

formula:

Amount = $p[1+\frac{r}{100} ]^{n}$

Substitute the given values in the formula:

Amount = $800[1+\frac{5}{100} ]^{2}$

Amount = $800[\frac{100+5}{100} ]^{2}$

Amount =  8(105)(105)/100

Amount = 8(11025)/100

Amount = 88,200/100

Amount = $ 882

Compound Interest = Amount - Principal

CI = 882 -800

Compound Interest = $82

Answer 2

In context to questions asked

We have to determine the value of CI

As per questions

We have

P = $ 800

Interest = 5%

Time = 2 yr

As we know that

$Amount = P (1+ \frac{r}{100})^t\\</p><p>Amount = P + CI$

So putting the value given in question in above equation.

We will get,

$a = 800(1 + \frac{5}{100} ) ^{2} \\ 800( \frac{105}{100}) ^{2} \\ = > 800 \times \frac{105}{100} \times \frac{105}{100} \\ = > 882$

Hence for finding CI we will subtract Principal from Amount

Thus we will get

$ci = 882 - 800 = 82$

Hence value of compound interest will be $ 82