Question

Find the compound interest for a principal amount of Rs. 4000 at a rate of 7.5% for 2 years.

Answer 1

Hint: The question is from the concept of compound interest. Here the principal amount is given to us i.e. Rs. 4000 we also have the rate of interest as 7.5% and the time given is 2 years. We are asked to calculate the compound interest. So we will use the formula of compound interest here.
Formula used:
If ‘P’ represents principal amount, ‘N’ represents the time duration and ‘R’ represents the rate of interest then the Compound interest (CI) with these parameters is given by the formula:
 $ CI = P \times {\left( {1 + \dfrac{R}{{100}}} \right)^N} $

Complete step-by-step answer:
We are given the principal amount as Rs. 4000
Now we also have the rate of simple interest that is 7.5% and we are given that the time duration is 2 years.
We are asked to find the compound interest.
So, let’s apply the formula to find the compound interest.
$\Rightarrow CI = P \times {\left( {1 + \dfrac{R}{{100}}} \right)^N} $
As we have P=4000, N=2, R=7.5 we can put these values above and get
$\Rightarrow CI = 4000 \times {\left( {1 + \dfrac{{7.5}}{{100}}} \right)^2} $
Let’s first calculate the terms inside the bracket and then multiply it by 4000
 $ \Rightarrow CI = 4000 \times {\left( {1 + 0.075} \right)^2} = 4000 \times {\left( {1.075} \right)^2} $
 $ \Rightarrow CI = 4000 \times 1.155625 = 4622.5 $
So now we have compound interest as 4622.5/-
So, the correct answer is “4622.5 R.s .

Note: While putting the values we should take care of the values so as to find the correct answer. Always prefer to use a neat and clean paper to multiply the numbers as calculation is the soul thing for such kinds of problems. Make sure to convert the unit of time into years if given in days and months.