Question

find the compound interest on rupees 11200 at 35 over 2% per annum for 2 years

Answer 1

The formula for calculating compound interest is:

Compound Interest = Total amount of Principal and Interest in future (or Future Value) less Principal amount at present (or Present Value)

= [P (1 + i)n] – P

= P [(1 + i)^(n) – 1]

(Where P = Principal, i = nominal annual interest rate in percentage terms, and n = number of compounding periods.)

Then,

P = 11200

i = 0.02 (for 2 % interest rate)

N = 2 years

Now,

compound interest = 11200 [ (1 + 0.02)^(2) - 1 ) ]

compound interest = 11200 [ (1.02)^(2) - 1 ]

compound interest = 11200 [ 1.0404 - 1 ]

compound interest = 11200 [0.0404]

compound interest = 452.48 Rs. Ans.