Question

Find the compound interest on the following
87000for 2yrs at 10percent per annum

Answer 1

To calculate the compound interest, we can use the formula:

A = P(1 + r/n)^(nt),

where:
A = the final amount (including interest)
P = principal amount (initial investment)
r = annual interest rate (as a decimal)
n = number of times the interest is compounded per year
t = number of years

Given:
P = $87,000
r = 10% = 0.10
n = 1 (since the interest is compounded annually)
t = 2 years

Plugging these values into the formula, we get:

A = 87000(1 + 0.10/1)^(1 * 2)
= 87000(1 + 0.10)^2
= 87000(1.10)^2
= 87000(1.21)
= $105,870

To find the compound interest, we subtract the initial principal amount from the final amount:

Compound Interest = A - P
= 105870 - 87000
= $18,870

Therefore, the compound interest on $87,000 for 2 years at an interest rate of 10% per annum is $18,870.