What would be the compound interest obtained on an amount of z 8,800 at the rate of 16 p.c.p.a. after 2 years ?
The sum becomes $$ 8800 \times (1+r)^{2} $$ after 2 years where r is the rate of interest (here 0.16)
Compound interest = $$ 8800 \times (1+r)^{2} $$ - 8800
= $$ 8800 \times (r^{2} + 2r) $$
= $$8800 \times 0.3456$$ ( by substituting r = 0.16)
= 3041.28
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