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The compound interest on Rs 18,000 at 10% per annum in two years is = ?

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Final answer:

The compound interest on Rs 18,000 at 10% per annum compounded annually over two years is Rs 3,780. This is calculated using the formula A = P(1 + r/n)^(nt) and subtracting the principal from the accumulated amount.

Step-by-step explanation:

The student is asking how to calculate the compound interest on an amount of Rs 18,000 at a rate of 10% per annum over a period of two years. To solve this, we can use the formula for compound interest which is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount, r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years.

Since the compounding frequency is not mentioned, we'll assume it is compounded annually (n=1). Thus, the formula becomes A = 18000(1 + 0.10/1)^(1*2).

Step-by-step, we calculate: A = 18000(1 + 0.10)^2 = 18000(1.10)^2 = 18000(1.21) = Rs 21,780.

To find the compound interest earned, we subtract the principal from this amount: Compound Interest = A - P = 21780 - 18000 = Rs 3,780. So, the compound interest on Rs 18,000 at 10% per annum in two years is Rs 3,780.

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