Question

Find the compound interest of Rs 4000/- at 5% per annum for 1 year if interest is compound annually.
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Answer 1

Given:

Rs 4000/- at 5% per annum for 1 year if interest is compound annually.

To Find:

Find the compound interest

Solution:

we are given a sum of Rs4000 which is being compounded annually at a 5% rate of interest and we need to find the interest after 1 year, to find the interest first we will calculate the amount after a year using the formula for compound interest that is,

$A=P(1+r)^t$

where,

         A= amount at the end

         P= principal amount

         r= rate of interest

         t= time

Now put the values in the formula to get the value of the amount after a year,

$A=4000(1+0.05)^1\\=4200$

Now the interest will be the final amount minus the principal amount which goes as,

CI=4200-4000

   =200

Hence, the compound interest is Rs200.