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

Step 1: Identify Given Values

First, we identify the principal amount (P), the annual interest rate (R), and the time period (n) from the problem statement. The principal is the initial amount, the rate is given as a percentage per annum, and the time is in years.

Step 2: Formula for Amount with Compound Interest

The formula for the amount (A) when interest is compounded annually is $A = P \left(1 + \frac{R}{100}\right)^n$. Here, P is the principal, R is the rate of interest per annum, and n is the number of years.

Step 3: Substitute Values and Calculate Amount

Now, we substitute the identified values of P, R, and n into the compound interest formula. We first simplify the term inside the parenthesis, then square it, and finally multiply by the principal to find the total amount.

Step 4: Calculate Compound Interest

Finally, to find the compound interest (CI), we subtract the principal amount (P) from the total amount (A) calculated in the previous step. This gives us the total interest earned over the 2 years.

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