Question

What sum of money will amount to ₹ 11,025 in 2 years at 5% p.a. compounded annually?

Answer 1

Given:

• Amount (A) = ₹ 11,025
• Time (n) = 2 years
• Rate (R) = 5% per annum
• Interest is compounded annually

Compound Interest:

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

`11025 = P(1 + 5/100)^2` 

= P(1.05)² 

= P × 1.1025

⇒ `P = 11025/1.1025`

⇒ P = ₹ 10,000