Question 87

What is the interest that has to be paid on a sum of Rs 40000 borrowed for 2 years at 5% p.a. compounded annually?

Solution

Amount = $$P(1+R/100)^n$$
Here P = 40000, R = 5, n = 2
Amount = $$40000*(1+5/100)^2$$ = 40000*441/400 = 44100
So, interest = Amount - Principal = 44100 - 40000 = Rs 4100


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