Question

What sum of money will amount to Rs. 5,445 in 2 years at 10% per annum compound interest?

Answer 1

Given:

P = Rs. 5,445 ; n = 2 years and r = 10%

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

⇒ 5,445 = `P (1 + 10/100 )^2`

⇒ 5445 = P(1.1)² 

⇒  `P = 5445/1.21`

⇒  P = Rs.4500

Hence the sum of money is Rs.4500