Question

Find the amount and the compound interest on rupees 5000 for 2 years at 6% per annum, Interest payable yearly. Answer with full steps and formula NO BAD ANSWERS REQUIRED :D

Answer 1

I. Amount = 5618 Rupees

II. Compound interest = 618 Rupees

Explanation:

• Given the following data;

• Principal = 5000 Rupees
• Time = 2 years
• Interest rate = 6%

To find the compound interest;

Mathematically, compound interest is calculated using the formula;

A = P(1 + r)^t

Where;

• A is the future value.
• P is the principal or starting amount.
• r is annual interest rate.
• t is the number of years for the compound interest.

Substituting into the formula, we have;

A = 5000(1 + 0.06)^2

A = 5000(1.06)^2

A = 5000 * 1.1236

A = 5618 Rupees

Next, we would determine the compound interest using the formula;

C.I = A - P

C.I = 5618 - 5000

Compound interest (C.I) = 618 Rupees