Question

Rahim, an unemployed youth, received $Rs.4000$ as loan at a loan mela organised by State Bank of India at a nominal rate of $2\frac{1}{2}$% per annum. Find out the compound interest that Rahim pays after $2$ years.

Answer 1

Principal $=Rs.4000$

Rate $=2.5\%$

Time $=2$ years

$A=P{(1+\frac{R}{100})}^T$

$A=4000{(1+\frac{2.5}{100})}^2$

$A=4000{\left(\frac{41}{40}\right)}^2$

$A=\frac{4000\times 41\times 41}{40\times 40}$

$A=Rs.4202.50$

$CI=A-P$

$CI=4202.50-4000=Rs.202.50$