Question

Principal= 2000 rate = 5% duration = 2 find the compound interest .

Answer 1

The compound interest is $ 205

Solution:

Given that,

Principal= 2000

Rate = 5%

Duration = 2 years

Find the compound interest

The compound interest is given as:

$Compound\ Interest = P(1+i)^t - P$

Where,

P is the principal

i is the interest rate in decimal

t is the number of years

Substituting the values we get,

$Compound\ Interest = 2000(1+0.05)^2 - 2000\\\\Compound\ Interest = 2000 (1.05)^2 - 2000\\\\Compound\ Interest = 2000 \times 1.1025 - 2000\\\\Compound\ Interest = 2205 - 2000\\\\Compound\ Interest = 205$

Thus the compound interest is $ 205

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