Finding the Time Period for Compound Interest
by Nirmal
(Dubai)
Question
in what time the compound interest on Rs800 at 20% per annum will amount to Rs1152 if compounded annually?
Answer
STEP 1The compound interest formula is given below:
Where:
- A is the total amount of money (including interest) after n years
- P is the principal (the amount money borrowed or invested)
- r is the interest rate (per year or per annum)
- n is the loan or investment duration in years
STEP 2Thus, let us substitute the values we have into the formula:
1152 = 800(1+0.2)^n
STEP 3We can then proceed to solve the equation:
1152/800 = (1.2)^n
1.44 = (1.2)^n
1.44 = (1.2)^2
Thus, it takes
two years for the compound interest to amount to Rs1152.
You can also refer to our tutorial on
how to calculate compound interest.