The present value of 10,000 due in 2 years at 5% p.a. compound interest when the interest is paid on yearly basis is
(answer:9070) how?
Answers
Given :
Amount (A) = 10000
no. of years (n) = 2 years
Rate (R) = 5%
To Find :
The Principal Amount.
Solution :
We know, Amount = P (P = Principal Amount)
By Putting A = 10000; n = 2; R = 5%
We have,
10000 = P
or, 10000 = P ×
or, P =
∴ P = Rs. 9070.29
Therefore, The principal amount is Rs. 9070.29.
What is compound interest?
Compound interest is the interest calculated on the principal and the interest accumulated over the previous period.
Answer:
Explanation:
Compound Interest
The interest that is calculated on the principal and interest accumulated over the previous period is known as compound interest. It is the interest that is earned by you on the interest.
Given:
Amount (A) =
Number of years (n) = years
Rate (R) = %
To find:
We have to find out the principal amount.
Solution:
We know that,
Amount =
Here, P is the Principal Amount
We have to use the values A = 10000, n= 2 years, and R = 5% and substitute them in the above equation.
We will get,
Final Answer:
Hence, the principal amount comes out to be Rs. 9070.29
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