A bank gives a compound interest of 8% per annum. If you invest $1000, how much

₹0.0

Question: A bank gives a compound interest of 8% per annum. If you invest $1000, how much will you have after 1 year?

Options:

Correct Answer: $1080

Solution:

Amount = Principal × (1 + Rate) = 1000 × (1 + 0.08) = 1000 × 1.08 = $1080.

A bank gives a compound interest of 8% per annum. If you invest $1000, how much will you have after 1 year?

A bank gives a compound interest of 8% per annum. If you invest $1000, how much will you have after 1 year?

Step 1: Identify the principal amount you are investing. In this case, it is $1000.
Step 2: Identify the interest rate given by the bank. Here, it is 8% per annum.
Step 3: Convert the interest rate from a percentage to a decimal. 8% as a decimal is 0.08.
Step 4: Use the formula for compound interest to calculate the total amount after 1 year. The formula is: Amount = Principal × (1 + Rate).
Step 5: Substitute the values into the formula: Amount = 1000 × (1 + 0.08).
Step 6: Calculate (1 + 0.08) which equals 1.08.
Step 7: Multiply the principal amount by the result from Step 6: Amount = 1000 × 1.08.
Step 8: Calculate the final amount: 1000 × 1.08 = $1080.

Compound Interest – Understanding how compound interest is calculated over a period of time.
Basic Arithmetic – Applying basic multiplication and addition to compute the final amount.