Question:
By using the formula, find the amount and compound interest on:
Rs 6000 for 2 years at 9% per annum compounded annually.
Solution:
Principal amount, $\mathrm{P}=$ Rs 6000
Rate of interest, $\mathrm{R}=9 \%$ per annum
Time, $n=2$ years.
The formula for the amount including the compound interest is given below :
$A=$ Rs. $P\left(1+\frac{R}{100}\right)^{\mathrm{n}}$
$\Rightarrow A=$ Rs. $6000\left(1+\frac{9}{100}\right)^{2}$
$\Rightarrow A=$ Rs. $6000\left(\frac{100+9}{100}\right)^{2}$
$\Rightarrow A=$ Rs. $6000\left(\frac{109}{100}\right)^{2}$
$\Rightarrow A=$ Rs. $6000(1.09 \times 1.09)^{2}$
$\Rightarrow A=$ Rs. $7128.6$
i. e., the amount including the compound interest is Rs $7128.6$.
$\therefore$ Compound interest $=$ Rs $(7128.6-6000)=$ Rs $1128.6$