Subjects finance

Compound Interest 596Ed8

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1. **Problem statement:** Adwoa invested 1200 at 10% per annum compound interest for 2 years. We need to find: a. The amount at the end of 2 years b. The compound interest earned 2. **Formula for compound interest:** The amount after $n$ years with principal $P$ and rate $r$ compounded annually is given by: $$ A = P \left(1 + r\right)^n $$ where $r$ is in decimal form. 3. **Calculate the amount:** Given $P = 1200$, $r = 0.10$, and $n = 2$: $$ A = 1200 \left(1 + 0.10\right)^2 = 1200 \times 1.10^2 $$ Calculate $1.10^2$: $$ 1.10^2 = 1.10 \times 1.10 = 1.21 $$ So, $$ A = 1200 \times 1.21 = 1452 $$ 4. **Calculate the compound interest:** Compound interest is the amount minus the principal: $$ CI = A - P = 1452 - 1200 = 252 $$ **Final answers:** a. Amount after 2 years = 1452 b. Compound interest = 252