Question

Find the compound interest on Rs. 10,000 at 10% per annum for 2 years, compounded annually.

Solution

1. Amount = 10,000 x (1 + 10/100)^2.
2. Amount = 10,000 x 1.1 x 1.1 = Rs. 12,100.
3. Compound interest = 12,100 - 10,000 = Rs. 2,100.