Find the compound interest at the rate of 10% per annum for four years on the principal which in four years at the rate of 4% per annum given Rs 1600 as simple interest.

Explanation

S.I in four years at the rate of `4%` per annum`=1600`
`p = `simple interest multiplied `100`/Rate multiplied by time.
`P=1600` multiplied by `100/4` multiplied by `4=`Rs.`10000`
Now, we have
`P=`Rs `10000, R =10%` and `n = 4`
Amount after `4` years `=p [1+R/100]^n`
`=10000` multiplied by `[1 + 10/100]^4`
`=10000` multiplied by `[1+1/10]^4`
`=10000` multiplied by `[11/10]^4`
`= 10000` multiplied by `(11/10) (11/10) (11/10) (11/10)`
`= 14641`
Hence. Compound interest `=` Rs. `14641 - `Rs `10000`= 4641`.