Interest is increasing. pay it please!

Algebra Level 1

Skanda borrowed a total amount of $20,000 from Sravanth.

Sravanth asked him to return back his money within 2years at the rate of 5 % 5\% .

Calculate the interest which should be paid by Skanda to Sravanth, if Sravanth likes to receive interest compounded annually.


The answer is 2050.

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1 solution

Ashish Menon
Jun 7, 2016

Let A \text{A} be the amount borrowed, P \text{P} be the principal amount, R % \text{R}\% be the interest rate, n \text{n} be the time period and CI \text{CI} be the compound interest, then:-
A = P ( 1 + R 100 ) n = 20000 × ( 1 + 5 100 ) 2 = 20000 × ( 21 20 ) 2 = 20000 × 441 400 = ( 441 × 50 ) CI = A P = ( 441 × 50 ) 20000 = ( 441 × 50 ) ( 400 × 50 ) = 50 ( 441 400 ) = 50 × 41 = 2050 \begin{aligned} \text{A} & = \text{P}{\left(1 + \dfrac{\text{R}}{100}\right)}^{\text{n}}\\ \\ & = 20000 × {\left(1 + \dfrac{5}{100}\right)}^{2}\\ \\ & = 20000 × {\left(\dfrac{21}{20}\right)}^{2}\\ \\ & = 20000 × \dfrac{441}{400}\\ \\ & = \left(441 × 50\right)\\ \\ \text{CI} & = \text{A} - \text{P}\\ \\ & = \left(441 × 50\right) - 20000\\ & = \left(441 × 50\right) - \left(400 × 50\right)\\ & = 50\left(441 - 400\right)\\ & = 50 × 41\\ & = \color{#3D99F6}{\boxed{2050}} \end{aligned}

@Skanda Prasad nice question ʕ•ٹ•ʔ Ashish \text{Ashish} would like Skanda \text{Skanda} to change the last phrase by compound interest method to compounded annually .

Ashish Menon - 5 years ago

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Done! Yep...this one looks better....

Skanda Prasad - 5 years ago

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Ashish \text{Ashish} is thanking Skanda \text{Skanda} .... typo in spelling of compoun__t__ed

Ashish Menon - 5 years ago

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@Ashish Menon S k a n d a \ce{Skanda} replies "No problem" to A s h i s h \ce{Ashish}

Skanda Prasad - 5 years ago

@Ashish Menon Realized....corrected....

Skanda Prasad - 5 years ago

Alright....just a sec...

Skanda Prasad - 5 years ago

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