Sum

A sum of Rs. 8,000 is invested for 2 years at 10% per annum compound interest. Calculate:**(i)** interest for the first year.**(ii)** principal for the second year.**(iii)** interest for the second year.**(iv)** the final amount at the end of the second year**(v)** compound interest earned in 2 years.

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#### Solution

**(i)** Here Principal (P) = Rs. 8,000

Rate of interest = 10%

Interest for the first year =`(8,000xx10xx1)/100`

= Rs.800

**(ii) **∴ Amount = Rs.8,000 + Rs.800 = Rs.8,800

Thus Principal for the second year = Rs.8,800

**(iii)** Interest for the second year

`=(8,800xx10xx1)/100`

= Rs.880

**(iv) **Amount at the end of second year = Rs.8,800 + Rs.880 = Rs.9,680

**(v)** Hence compound interest earned in 2 years

= Rs.9,680 − Rs.8,000 = Rs.1680

Concept: Concept of Compound Interest

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