Question

What is the compound interest on rs. 48000 for 2 years at 20% p.a, if interest is compounded annually?

Answer 1

Given:

• Principal = Rs. 48000
• Rate = 20 %
• Time = 2 years

What To Do:

We have to find the compund interest.

Formula For Finding:

1. $\sf{ A = P \bigg( 1 + \dfrac{R}{100} \bigg) ^ T}$

2. CI = A - P

Solution:

• Finding the amount.

Using the formula,

⇒ $\sf{ A = P \bigg( 1 + \dfrac{R}{100} \bigg) ^ T}$

Substitute the values,

⇒ $\sf{ A = 48000 \bigg( 1 + \dfrac{20}{100} \bigg) ^ 2}$

Solve the brackets,

⇒ $\sf{ A = 48000 \bigg( \dfrac{120}{100} \bigg) ^ 2}$

Remove the brackets,

⇒ $\sf{ A = 48000 \times \dfrac{120}{100} \times \dfrac{120}{100}}$

Cancel the zeros,

⇒ $\sf{ A = 48 \! \! \! \not 0 \! \! \! \not 0 \! \! \! \not 0 \times \dfrac{120}{1 \! \! \!\not 0 \! \! \! \not 0} \times \dfrac{12 \! \! \! \not0}{1\! \! \! \not 0 \! \! \! \not0}}$

Also written as,

⇒ A = 48 × 12 × 12

Multiply the numbers,

⇒ A = Rs. 69120

• Finding the compund interest.

Using the formula,

⇒ CI = A - P

Substitute the values,

⇒ CI = Rs. 69120 - Rs. 48000

Subtract the amount,

⇒ CI = Rs. 21120

∴ Hence, the compund interest is Rs. 21120.