What will be compound interest on an amount of Rs 5000/- at the rate of 8% p.a. at the end of 2 years?

Options

A. Rs 832/-
B. Rs 842/ -
C. Rs 823/-
D. Rs 840/-

Answer

To calculate the compound interest on an amount of Rs 5000 at the rate of 8% per annum for 2 years, we can use the formula for compound interest:

**Step 1: Identify the variables.**
- Principal (P) = Rs 5000
- Rate of interest (R) = 8% per annum
- Time (T) = 2 years

**Step 2: Use the compound interest formula.**
The formula for compound interest is given by:
\[ A = P \left(1 + \frac{R}{100}\right)^T \]
Where:
- A = Amount after time T
- P = Principal amount
- R = Rate of interest
- T = Time in years

**Step 3: Substitute the values into the formula.**
\[ A = 5000 \left(1 + \frac{8}{100}\right)^2 \]
\[ A = 5000 \left(1 + 0.08\right)^2 \]
\[ A = 5000 \left(1.08\right)^2 \]

**Step 4: Calculate \( (1.08)^2 \).**
\[ (1.08)^2 = 1.1664 \]

**Step 5: Calculate the total amount (A).**
\[ A = 5000 \times 1.1664 \]
\[ A = 5832 \]

**Step 6: Calculate the compound interest (CI).**
To find the compound interest, subtract the principal from the total amount:
\[ CI = A - P \]
\[ CI = 5832 - 5000 \]
\[ CI = 832 \]

Thus, the compound interest on Rs 5000 at the rate of 8% per annum at the end of 2 years is **Rs 832**.

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