Question:
Daljit received a sum of Rs. 40000 as a loan from a finance company. If the rate of interest is 7% per annum compounded annually, calculate the compound interest that Daljit pays after 2 years.
Solution:
$\mathrm{A}=\mathrm{P}\left(1+\frac{\mathrm{R}}{100}\right)^{\mathrm{n}}$
$=40,000\left(1+\frac{7}{100}\right)^{2}$
$=40,000(1.07)^{2}$
$=45,796$
Thus, the required amount is Rs 45,796 .
Now,
$\mathrm{CI}=\mathrm{A}-\mathrm{P}$
$=\mathrm{Rs} 45,796-\mathrm{Rs} 40,000$
$=\mathrm{Rs} 5,796$
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