A man borrowed Rs. 20,000 for 2 years at 8% per year compound interest. Calculate :
(i) the interest of the first year.
(ii) the interest of the second year.
(iii) the final amount at the end of the second year.
(iv) the compound interest of two years.
Here Principal (P) =Rs.20,000, Time = 1 year
Rate = 8%
(i) ∴ The interest of the first year =`(20,000xx8xx1)/100`
(ii) ∴ Amount after one year
i.e. Principal for second year = Rs.20,000 + Rs.1,600 = Rs.21,600
∴ Interest for second year =`(21,600xx8xx1)/100`
= 216 × 8
(iii) Final amount at the end of second year
= Rs. (21,600 + 1728) = Rs.23,328
(iv) Interest of two years = Rs.23,328 − Rs.20,000 = Rs.3,328