Find the compound interest on Rs 10,000 at 10% per annum for 2 years, compounded annually.
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Step-by-Step Solution
Step 1: Identify the given values
First, we need to identify the given values from the problem statement. The principal amount is Rs 10,000, the annual interest rate is 10%, and the time period is 2 years.
Step 2: Apply the formula for Amount with Compound Interest
The formula to calculate the amount (A) when interest is compounded annually is A=P(1+100R)n, where P is the principal, R is the rate of interest, and n is the time period in years.
Step 3: Substitute the values and calculate the Amount
Now, we substitute the identified values into the compound interest formula. We calculate the term inside the parenthesis first, then square it, and finally multiply by the principal to find the total amount.
Step 4: Calculate the Compound Interest
Compound Interest (CI) is the difference between the total amount (A) and the principal (P). Subtracting the principal from the calculated amount gives us the compound interest.