Question

Calculate the amount and compound interest on Rs 5000 compounded annually or 2 years 6 months at the rate of 10% per annum.

Answer 1

Answer:

Amount

Rs 6345.30

Compound interest

Rs 1,345.30

Step-by-step explanation:

Here in this question, we are interested in calculating the amount and the compound interest on the value given.

To calculate the amount, we use the formula below;

A = P(1 + r/n)^nt

Where; A is the amount which we want to calculate

P is the principal which is Rs 5,000

r is the interest rate per annum = 10% = 10/100 = 0.1

n is the number of times per year in which it is compounded ( since it is annually, then it is 1)

t is the number of years which is 2.5 years( kindly know that 6 months is same 1/2 year , so 6 months is same as 0.5, and thus 2 years 6 months becomes 2.5 years)

now let’s substitute all these values;

A = 5000(1 + 0.1/1)^(1*2.5)

A = 5000(1 + 0.1)^2.5

A = 5000(1.1)^2.5

A = 6,345.2935314294

This is approximately Rs 6,345.30

The second part of the question asks to calculate compound interest

Mathematically ;compound interest = Amount - principal

= 6345.3 - 5000 = Rs 1,345.30