Find the amount and the compound interest on ₹ 2000.

Find the amount and the compound interest on ₹ 2000 at 10% p.a. for 2 years, compounded annually.

Solution:

It is given that
Principal (P) = ₹ 2000
Rate of interest (r) = 10% p.a.
Period (n) = 2 ½ years
We know that
Amount = P (1 + r/100)n
Substituting the values
= 2000 (1 + 10/100)2 (1 + 10/(2 × 100))
By further calculation
= 2000 × 11/10 × 11/10 × 21/20
So we get
= ₹ 2541
Here
Interest = A – P
Substituting the values
= 2541 – 2000
= ₹ 541

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