Question

Given the principal = Rs 40,000, rate of interest = 8% p.a. compounded annually. Find Interest for 2^nd year.

Answer 1

Given, principal (P)= Rs.40000

Rate of interest (R) = 8% per annum

Now, amount for the second year:

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

`A = 43200(1 + 8/100)^1`

A = Rs. 46656

Compound interest = Amount – Principal

= Rs. 46656 – Rs. 43200

= Rs. 3456