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