Question:
By using the formula, find the amount and compound interest on:
Rs 9000 for 2 years 4 months at 10% per annum compounded annually.
Solution:
Principal amount, $P=$ Rs. 9000
Rate of interest, $R=10 \%$ p. a.
Time, $n=2$ years 4 months $=2 \frac{1}{3}$ years $=\frac{7}{3}$ years
The formula for the amount including the compound interest is given below:
$A=$ Rs. $P \times\left(1+\frac{R}{100}\right)^{\mathrm{n}}$
$=$ Rs. $\left(9000 \times\left(1+\frac{10}{100}\right)^{2} \times\left(1+\frac{\frac{1}{3} \times 10}{100}\right)\right)$
$=$ Rs. $(9000 \times 1.10 \times 1.10 \times 1.033)$
$=$ Rs. $11252.9 \approx 11253$
i. e., the amount including the compound interest is Rs 11253 .
$\therefore$ Compound interest $=$ Rs. $(11253-9000)=$ Rs. 2253