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# Find the principal that should be deposited in a bank so that the amount for 2 years is Rs.22050 at a rate of interest 5% compounded annually?

**Given :**

**
**

Amount A = Rs.22050

Rate of interest R = 5%

Time n = 2 years

**To find :**

We have to find the principal amount.

**Solution :**

Let the principal amount be P.

We know that,

Formula for amount when the interest is compounded annually is,

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

Therefore,

$22050 = P(1 +\frac{ 5}{100})^{2}$

$22050 = P[\frac{100+5}{100}]^{2}$

$22050 = P(\frac{105}{100})^{2}$

$P = \frac{22050 \times 100 \times 100}{105\times105}$

$P = \frac{210\times100\times100}{1\times105}$

$P = 2\times100\times100$

P = 20000

**The principal amount that should be deposited in the bank is Rs. 20000.**

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