MathematicsWhat would be the compound interest on Rs.5,000 at 4% per annum for 2 years compounded annually?

What would be the compound interest on $Rs . 5, 000$ at $4 %$ per annum for $2$ years compounded annually?

We have been given,
Principal

= Rs . 5000

Rate

= 4 %

per annum
Time

= 2 years

Calculating the amount,

A = P (1 + \frac{R}{100})^{T}

Substituting the values,

A = 5000 (1 + \frac{4}{100})^{2}

A = 5000 \times (\frac{104}{100})^{2}

A = Rs . 5408

We know, compound interest is the difference of amount and price.
So, Compound interest

= A - P

.
Substituting the values,

\Rightarrow 5408 - 5000

\Rightarrow Rs . 408

Therefore, the required value is Rs. 408.
Hence, option 4 is correct.

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