Question

A sum of Rs. 20,000 is borrowed by Heena for 2 years at an interest of 8% compounded annually. Find the Compound Interest (C.I.) and the amount she has to pay at the end of 2 years.

Answer 1

Let the principal for the first year be P₁. Here, P₁ = Rs. 20,000.

SI₁ = SI at 8% p.a. for 1^st year = ₹ `(20000 xx 8)/100` = ₹ 1600

Amount at the end of 1st year = P₁ + SI₁
= Rs. 20000 + Rs. 1600
= Rs. 21600 = P₂ (Principal for 2nd year)

SI₂ = SI at 8% p.a. for 2nd year = ₹ `(21600 xx 8)/100` = ₹ 1728

Amount at the end of 2nd year = P₂ + SI₂

= Rs. 21600 + Rs. 1728

= Rs. 23328

Total interest given = Rs. 1600 + Rs. 1728 = Rs. 3328.