Question

Find the amount and compound interest on ₹16,000 for 2 years at 15%, interest being payable annually.

Answer 1

Amount at the end of 2 years = Rs. 21,160

Amount at the end of first year = Rs. 18,400

So interest for first year = Rs. 2400

Interest for second year = Rs. 2760

Explanation:

A = P (1 + r/n)^nt

P = 16,000

A = ?

r = 15% = 15/100

n= 1

t = 2

Substituting the values in the formula, we get:

A = 16000 (1 + 15 / 100) ^2

A = 16000 (23 / 20) ^2

A = 16000 * 23 * 23 / 400

A = 40 * 23 * 23

A = 21160

Amount at the end of 2 years = Rs. 21,160

Amount at the end of first year = Rs. 18,400

So interest for first year = Rs. 2400

Interest for second year = Rs. 2760