find the amount and the compound interest on 10000 at 5% per annum for 2 years compounded annually?
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Concept:
The formula for amount , with t = 2 when the interest is compounded annually is:
A = P ( 1 + r / 100)²
Given:
We have
Principal = P = 10,000
Interest = r = 5 % per annum
Time period = t = 2 years.
Find:
We need to find the compound interest and the amount after 2 years.
Solution:
We know that, with t = 2,
A = P ( 1 + r / 100)²
Using this formula,
A = 10,000( 1 + 5 / 100)²
A = 10,000(1.05)²
A = 10,000 ( 1.1025)
A = 11025
Compound interest = A - P
CI = 11025 - 10000
CI = 1025
Therefore, the amount is 11025 and the compound interest is 1025.
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