Question

salma borrowed from mahila samiti a sum of rs.1875 to purchase a sewing machine. if the rate of interest is 4% per annum, what is the compound interest that she has to pay after 2 years?​

Answer 1

Principal for the first year = Rs 1875

Rate of interest = 4% p.a.

Interest for the first year = Rs (1875 × 4 × 1) / 100

= 75

Amount at the end of first year = Rs 1875 + Rs 75

= Rs 1950

Principal for the second year = Rs 1950

Interest for the second year = Rs (1950 × 4 × 1) / 100

= 78

Amount at the end of second year = Rs 1950 + Rs 78

= Rs 2028

Hence,

Compound interest paid by Salma = Final amount – (original) Principal

= Rs 2028 – Rs 1875

= Rs 153

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