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What is the compound interest on $2000 at a rate of 10% per annum for 2 years?

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Question: What is the compound interest on $2000 at a rate of 10% per annum for 2 years?

Options:

  1. $400
  2. $220
  3. $242
  4. $200

Correct Answer: $242

Solution: 

Compound Interest = P(1 + r/n)^(nt) - P = 2000(1 + 0.1)^2 - 2000 = 2000(1.21) - 2000 = $242.

What is the compound interest on $2000 at a rate of 10% per annum for 2 years?

Practice Questions

Q1
What is the compound interest on $2000 at a rate of 10% per annum for 2 years?
  1. $400
  2. $220
  3. $242
  4. $200

Questions & Step-by-Step Solutions

What is the compound interest on $2000 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 applying the compound interest formula: A = P(1 + r/n)^(nt).
  • Rate and Time – Recognizing the importance of the interest rate and the time period in calculating compound interest.
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