Question

The compound interest on Rs 5000 at 4% p.a. for 2 years, compounded annually is ​

Answer 1

Given:-

• Principal (P) = Rs. 5000.
• Rate of interest (R) = 4%.
• Tume period (n) = 2 years.

To find:-

• Compound interest.

Solution:-

• For Compound interest we need amount. We do not have Amount. So, by using formula of compounded annually that is:

$\boxed{ \sf\bold{Amount = P {(1 + \frac{R}{100} )}^{n} }}$

In which,

• P = Principal.
• R = Rate of interest.
• n = time period

P = Rs. 5000.

R = 4%.

n = 2 years.

Put all values in Compounded annually formula,

$\implies \sf \bold{500 {(1 + \cfrac{4}{100} )}^{2} }$

$\implies \sf \bold{500 {( \cfrac{100 + 4}{100}) }^{2} }$

$\implies \sf \bold{5000 {( \cfrac{104}{100}) }^{2} }$

$\implies \sf \bold{50 \cancel{00} \times \cfrac{104}{ 1\cancel{00}} \times \cfrac{104}{100} }$

$\implies \sf \bold{ \cfrac{5408 \cancel{00}}{1 \cancel{00}} }$

$\implies \sf \bold{5408}$

Amount = Rs. 5408

Formula for compound interest is :

$\boxed{ \sf \bold{Compound \: interest = Amount - Principal}}$

Put the values

= 5408 - 5000

= 408

Therefore,

Compound interest is Rs. 408.