Question

What will be the compound interest on Rs 4000 in two years when rate of interest is 5% per annum?

Answer 1

We know that amount A at the end of n years at the rate of R % per annum is given by A = P\[ \left( 1 + \frac{R}{100} \right)^n . \]
Given: 
P = Rs 4, 000
R = 5 % p . a .
n = 2 years
Now,
\[A = 4, 000 \left( 1 + \frac{5}{100} \right)^2 \]
\[ = 4, 000 \left( 1 . 05 \right)^2 \]
 = Rs 4, 410
And, 
CI = A - P
 = Rs 4, 410 - Rs 4, 000
 = Rs 410