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What is the compound interest on $5000 at a rate of 10% per annum for 2 years?

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Question: What is the compound interest on $5000 at a rate of 10% per annum for 2 years?

Options:

  1. $1000
  2. $1100
  3. $1200
  4. $1210

Correct Answer: $1210

Solution: 

CI = P(1 + r/100)^n - P = 5000(1 + 0.10)^2 - 5000 = 5000(1.21) - 5000 = $1050.

What is the compound interest on $5000 at a rate of 10% per annum for 2 years?

Practice Questions

Q1
What is the compound interest on $5000 at a rate of 10% per annum for 2 years?
  1. $1000
  2. $1100
  3. $1200
  4. $1210

Questions & Step-by-Step Solutions

What is the compound interest on $5000 at a rate of 10% per annum for 2 years?
  • Compound Interest – The interest calculated on the initial principal, which also includes all the accumulated interest from previous periods.
  • Formula Application – Understanding and correctly applying the compound interest formula: CI = P(1 + r/100)^n - P.
  • Percentage Calculation – Calculating the interest rate as a decimal and understanding its impact on the principal over time.
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