How much compound interest is earned by investing $Rs.\ 20000$ for $6$ years at $5$ % per annum compounded annually?

Given: Investment, $P=Rs.\ 20000$, Time, $t=6\ years$, Rate, $r=5$ %.

To do: To find the compound interest earned by the investment.

Solution:

By using the formula,

$\Rightarrow A=P( 1+\frac{r}{100})^t$

$\Rightarrow A=20000( 1+\frac{5}{100})^6$

$\Rightarrow A=20000( 1+\frac{1}{20})^6$

$\Rightarrow A=20000( \frac{21}{20})^6$

$\Rightarrow A=20000( 1.05)^6$

$\Rightarrow A=20000\times1.34$

$\Rightarrow A=26801.91$

Therefore, compound interest:

$C.P.=A-P=26801.91-20000=6801.91$

Thus, compound interest is $Rs.\ 6801.91$

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Updated on: 10-Oct-2022

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