Diljit 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 Diljit pays after 2 years.

Explanation

`A=P[1+ R/100 ]^T`
`A=40000[1+7/100]^2`
`A=40000[107/100]^2`
`A=40000[1.07]^2`
`A=`Rs.`45796`
Now, the compound interest will be
`C.I=A−P`
`C.I=45796−40000`
`C.I=`Rs.`5796`
Hence,Compound interest`=`Rs.`5796`.