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What would be the compound interest obtained on an amount of z 8,800 at the rate of 16 p.c.p.a. after 2 years ?
- A3,041.25
- B3,014.28
- C3,044.69
- D3,041.28
Answer not set
Discussion 1
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Solution
The sum becomes $ 8800 \times (1+r)^{2} $ after 2 years where r is the rate of interest (here 0.16)
Compound interest = $ 8800 \times (1+r)^{2} $ - 8800
= $ 8800 \times (r^{2} + 2r) $
= $8800 \times 0.3456$ ( by substituting r = 0.16)
= 3041.28
The sum becomes $ 8800 \times (1+r)^{2} $ after 2 years where r is the rate of interest (here 0.16)
Compound interest = $ 8800 \times (1+r)^{2} $ - 8800
= $ 8800 \times (r^{2} + 2r) $
= $8800 \times 0.3456$ ( by substituting r = 0.16)
= 3041.28