Question

Find the amount and compound interest on ₹ 50000 in 2 years at 8% compounded annually.

Answer 1

Given:

• Principal, (P = ₹ 50,000)
• Rate of interest, (r = 8%) per annum
• Time, (n = 2) years
• Interest is compounded annually

Step-wise calculation:

1. Use the compound interest formula for amount (A):

`A = P(1 + r/100)^n`

2. Substitute the values:

`A = 50000 xx (1 + 8/100)^2`

`A = 50000 xx (108/100)^2`

3. Calculate:

`A = 50000 xx 108/100 xx 108/100`

A = 50000 × 1.08 × 1.08

A = 50000 × 1.1664

A = ₹ 58,320

4. Calculate compound interest (C.I.):

C.I. = A – P

C.I. = 58,320 – 50,000

C.I. = ₹ 8,320