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Question
Given the principal = Rs 40,000, rate of interest = 8% p.a. compounded annually. Find
- Interest if period is one year.
- Principal for 2nd year.
- Interest for 2nd year.
- Amount if period is 2 years.
Solution
Given, principal (P) = Rs. 40000
Rate of interest (R) = 8% per annum
a. Compound interest for one year,
We know that,
`A = P(1 + R/100)^n`
= `40000(1 + 8/100)^1` ...[∵ n = 1 yr]
= `40000 xx 108/100`
∴ Amount, A = 400 × 108 = Rs. 43200
∴ Compound interest, CI = A – P
= Rs. 43200 – Rs. 40000
= Rs. 3200
b. Amount of 1st year = Principal of 2nd year = Rs. 43200
c. 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
d. For period of two years, we have already calculated amount = Rs. 46656
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