Skanda borrowed a total amount of $20,000 from Sravanth.
Sravanth asked him to return back his money within 2years at the rate of .
Calculate the interest which should be paid by Skanda to Sravanth, if Sravanth likes to receive interest compounded annually.
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Let A be the amount borrowed, P be the principal amount, R % be the interest rate, n be the time period and CI be the compound interest, then:-
A CI = P ( 1 + 1 0 0 R ) n = 2 0 0 0 0 × ( 1 + 1 0 0 5 ) 2 = 2 0 0 0 0 × ( 2 0 2 1 ) 2 = 2 0 0 0 0 × 4 0 0 4 4 1 = ( 4 4 1 × 5 0 ) = A − P = ( 4 4 1 × 5 0 ) − 2 0 0 0 0 = ( 4 4 1 × 5 0 ) − ( 4 0 0 × 5 0 ) = 5 0 ( 4 4 1 − 4 0 0 ) = 5 0 × 4 1 = 2 0 5 0