Question

What is the total compound interest of a loan for $5000 with an annual interest rate of 8% at the end of a two-year period?

Answer 1

= $832s

Step-by-step explanation:

CI = 5000*(1+8/100)^2

=5832 -5000

= $832s

There is a difference between the CI and SI. For SI principal remains the same each year. However, when we deal with CI then the new principal is the starting principal plus the interest. And that is the difference between the two. Also, the formula hence for CI is:

CI= P(1 +R/100)^N -P

SI= PRT/100