To find the compound interest on a sum of ₹20,000 borrowed at an annual interest rate of 8% for 2 years, we will use the formula for compound interest compounded annually:

\(A = P \left(1 + \frac{r}{100}\right)^n\)

where:

• \(A\) = the amount after \(n\) years
• \(P\) = the principal amount (₹20,000)
• \(r\) = annual interest rate (8%)
• \(n\) = number of years (2)

Substituting the given values into the formula:

\(A = 20000 \left(1 + \frac{8}{100}\right)^2\)

\(A = 20000 \left(1 + 0.08\right)^2\)

\(A = 20000 \times (1.08)^2\)

First, calculate \((1.08)^2\):

\((1.08)^2 = 1.08 \times 1.08 = 1.1664\)

Now, calculate the amount (\(A\)):

\(A = 20000 \times 1.1664 = 23328\)

The compound interest can be calculated as:

\(CI = A - P\)

\(CI = 23328 - 20000 = 3328\)

Therefore, the compound interest is ₹3,328.