A sum of ₹2000 is invested at 20% compound interest per annum, compounded annually for 2 years. What is the compound interest earned at the end of 2 years?
₹880
For compound interest, the amount after time is \(A = P\left(1+\frac{R}{100}\right)^n\).
Here principal \(P = 2000\), rate \(R = 20\%\) and time \(n = 2\) years.
\(A = 2000\left(1+\frac{20}{100}\right)^2 = 2000\left(\frac{6}{5}\right)^2 = 2000 \times \frac{36}{25} = 2880\).
Compound interest = Amount − Principal = \(2880 - 2000 = 880\).
Hence, the compound interest earned is ₹880.
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