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Daljit Received a Sum of Rs. 40000 as a Loan from a Finance Company. If the Rate of Interest is 7% per Annum Compounded Annually, Calculate the Compound Interest that Daljit Pays After 2 Years.

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Question

Daljit received a sum of Rs. 40000 as a loan from a finance company. If the rate of interest is 7% per annum compounded annually, calculate the compound interest that Daljit pays after 2 years.

Numerical
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Solution

\[A = P \left( 1 + \frac{R}{100} \right)^n \]
\[ = 40, 000 \left( 1 + \frac{7}{100} \right)^2 \]
\[ = 40, 000 \left( 1 . 07 \right)^2 \]
 = 45, 796
Thus, the required amount is Rs 45, 796. 
Now, 
CI = A - P
 = Rs 45, 796 - Rs 40, 000
 = Rs 5, 796
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