Find the compound interest if Rs.4000 are invested for 2 years at
the rate of 7.5 p.c.p.a.
Answers
Given:- ⓢⓞⓛⓤⓣⓘⓞⓝ
Principal =4000 ruppes
time=2 years
rate of interest=7.5%
To solve the sum we use the formula of compound interest
Amount=p(1+r/100)t[p is principal,r is rate of interest and t is time]
Amount=4000(1+7.5/100)²ruppes
=4000×107.5×107.5/100/100ruppes
=4622.5 ruppes
compound interest=Amount - principal
=4622.5-4000ruppes
=622.5 ruppes
compound interest
Compound interest refers to the phenomenon whereby the interest associated with a bank account, loan, or investment increases exponentially—rather than linearly—over time. The key to understanding the concept is the word “compound”. Suppose you make a $100 investment in a business which pays you a 10% dividend every year. You have the choice of either pocketing those dividend payments as cash, or reinvesting those payments into additional shares. If you choose the second option, reinvesting the dividends and compounding them together with your initial $100 investment, then the returns you generate will start to grow overtime.
Answer:
622.5 Rs is right answer .