Question

Q4. The compound interest on 25000 at 8% per
annum for 2 years, compounded annually is-​

Answer 1

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Solution:

Principal for the first year = $25000.

Interest for the first year = $25000×6×1100 = $1500.

Amount at the end of the first year $(25000 + 1500) = $26500.

Principal for the second year = $26500.

Interest for the second year = $26500×6×1100 = $1590.

Amount at the end of the second year = $(26500 + 1590) = $28090.

Principal for the third year = $28090.

Interest for the third year = $28090×6×1100 = $1685.40

Amount at the end of the third year = $(28090 + 1685.40) = $29775.40.

Therefore, compound interest = $(29775.40 - 25000) = $4775.40.

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