Question

What does $10$ percent per annum mean?

Answer 1

Hint: The given problem requires us to have a strong grip over the basic and core concepts of interest calculation over a principal amount. The interest is calculated as a percent of the bank balance. This interest may be calculated after a specific period of time. If the interest is calculated yearly, then the rate of interest is expressed as percent per annum.

Complete step-by-step answer:
In the given problem, we have to explain the meaning of $10$ percent per annum.
We know that per annum is an accounting term that is often used when describing the rate of interest over a loan or an investment made.
The rate of interest is the percentage of return offered over a principal amount. Rate of interest can be expressed per annum, per quarter or per half year. So, per annum is a way of expressing the rate of interest over a principal amount.
In other words, per annum means that interest will be charged or calculated yearly or annually.
So, $10$ percent per annum means that $10$ percent interest will be charged yearly or annually over a principal amount or a loan.

Note: If the rate of interest is $10$ percent per annum, then the interest calculated will be $10$ percent of the principal amount. $10$ Percent of the principal amount is calculated by simply multiplying $10$ percent with the principal. For example: We take a loan of rupees $1000$ at $10$ percent per annum, then the interest calculated over the amount after one year will be rupees $100$ as $10$ percent of $1000$ is $100$.