[Solved] Find the compound interest for two years compounded annually (2024)

Given:

Principal = Rs. 5000

The rate of interest = 20% per annum

Time = 2 years

Formula Used:

C.I = P[{1 + (R/100)}T- 1]

Where,

C.I = Compound Interest

P = Principal

R = Rate of Interest

T = Time

Calculation:

According to the question, we have

C.I = 5000[{1 + (20/100)}2- 1]

⇒ 5000[{1 + (1/5)}2- 1]

⇒ 5000[(6/5)2- 1]

⇒ 5000× [(36/25) - 1]

⇒ 5000× (36 - 25)/25

⇒ 200× 11

∴ The compound interest is Rs. 2200.

Shortcut Trick

Concept Used:

Total rate%of 2 years (at C.I) = [X+ X+ (X)2/100]%

Calculation:

Total rate%of 2 years = [20 + 20 + (20)2/100]%

⇒ [40+ 400/100]%

⇒ [40 + 4]%

⇒ 44%

According to the question, we have

C.I = 5000× (44/100)

⇒ 50× 44

⇒ 2200

∴ The compound interest is Rs. 2200.