Q1 of 74 Page 144

Find the amount and the compound interest on Rs. 2500 for 2 years at 10% per annum, compounded annually.

Present value = Rs.2500


Interest rate = 10% per annum


Time = 2 years


Amount (A) = P (1 + R/100)n


[Where, P = Present value


R = Annual interest rate


n = Time in years]


∴ A = 2500 (1 + 10/100)2


⇒ A = 2500 (11/10)2


⇒ A = 2500 × 121/100


⇒ A = 25 × 121


⇒ A = 3025


∴ Amount = Rs.3025


∴ Compound interest = Rs.(3025 – 2500)


= Rs.525


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