Question

Compound interest on rs.2500 for 5 years at 4% per annum (compounded annually) is

Answer 1

Step-by-step explanation:

the answer is in the pic above

Answer 2

The compound interest on Rs.2500 for 5 years at 4% per annum (compounded annually) is Rs. 541.63.

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Let's understand a few concepts:

To calculate the compound interest annually we will use the following formula:

$\boxed{\bold{Compound\:Interest = P [(1 + \frac{R}{100})^n - 1 ]}}$

where P = Principal, R = rate of compound interest and n = no. of years

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Let's solve the given problem:

The sum of money, (P) = Rs. 2500

The no. of years, (n) = 5 years

The rate of compound interest, (R) = 4% p.a.

Therefore, by using the above formula, we get

The compound interest is,

= $2500 [(1 + \frac{4}{100})^5 - 1 ]$

= $2500 [(1 + \frac{1}{25})^5 - 1 ]$

= $2500 [( \frac{26}{25})^5 - 1 ]$

= $2500 [( 1.04)^5 - 1 ]$

= $2500 [1.216652 - 1 ]$

= $2500 \times 0.216652$

= $\bold{Rs. \:541.63}$

Thus, the compound interest on Rs. 2500 for 5 years at 4% per annum (compounded annually) is Rs. 541.63.

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