Question

Calculate the compound interest on Rs 18,000 in 2 years at \[15\% \] per annum.

Answer 1

Hint:
In this we will simply use compound interest formula and put the values in the formula and this is how we will find the interest .We will put the principle, time and per annum percentage and the price in the formula, it will give us the amount, to get compound interest we subtract principle from amount, hence we get the answer.

Complete step by step solution:
By given question we will get
 \[P = 18000\]
 \[N = 2\]
 \[R = 15\% \]
P is for the principle, N is for the amount of time it takes, and R is for the interest is applied
Now we will be use compound interest formula, which is given below
Here we can see that principle, interest and amount of time, everything is given, so it will get easier to solve by just putting the values in its place in the formula
 \[A = P{\left( {1 + \dfrac{R}{{100}}} \right)^n}\]
Now we will put all values in the compound interest formula according to given
So, we have,
 \[ \Rightarrow A = 18000{\left( {1 + \dfrac{{15}}{{100}}} \right)^2}\]
On simplifying the bracket, we get,
 \[ \Rightarrow A = 18000{\left( {1 + 0.15} \right)^2}\]
On adding the terms inside the bracket, we get,
 \[ \Rightarrow A = 18000{\left( {1.15} \right)^2}\]
On simplification we get,
 \[ \Rightarrow A = 18000 \times 1.3225\]
On multiplication we get,
 \[ \Rightarrow A = 23805\]
Hence compound interest is Amount minus the principle,
 \[ \Rightarrow C.I. = A - P\]
On substituting the values, we get,
 \[ \Rightarrow C.I. = 23805 - 18000\]
On simplification we get,
 \[ \Rightarrow C.I. = 5805\]

Therefore, the compound interest is Rs 5805.

Note:
Compound interest is the interest paid on the original principal and on the accumulated past interest. This is very important in banks and investment. Important part of taking a loan from the bank is how we calculate compound interest accordingly. Every bank has a different interest rate.