Question

1.) Suppose P55,000 was borrowed from ABC Lending Company at 5% interest

per year for 2 years. Find the amount after two years.

Answer 1

Given:

Principal value of loan = 55,000

Rate of interest = 5%

Time = 2 year

To find:

The amount after two years.

Solution:

The formula for amount is

`A=P\left(1+(r)/(100)\right)^t`

Where, P is principal, r is rate of interest in %, t is time in years.

Putting P=55,000, r=5 and t=2, we get

`A=55000\left(1+(5)/(100)\right)^2`

`A=55000\left(1+0.05\right)^2`

`A=55000\left(1.05\right)^2`

`A=55000(1.1025)`

`A=60637.50`

Therefore, the amount after two years is P60637.50.