What is the compound interest on Rupees 5000 at 10% per annum for 2 years?

Question 1 Compound Interest Exercise 2.2

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Answer:

Compound interest is the total annual interest earned on a principal loaned for a specific time period.

Amount - The amount of money left at the end.

The total compound interest earned is the sum of the initial principal and all compound interest earned.

It is given that

Principal (P) = ₹ 5000

Rate of interest (r) = 6% p.a.

Period (n) = 2 years

We know that

Amount = \mathrm{P}(1+\mathrm{r} / 100)^{\mathrm{n}}

Substituting the values

=5000(1+6 / 100)^{2}

By further calculation

= 5000 × 53/50 × 53/50

= ₹ 5618

Here

CI = A – P

Substituting the values

= 5618 – 5000

= ₹ 618

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