Step-by-step explanation:
P = ₹5000
See Also
Present Value (PV)Present Value - EconlibCalculating the Future Value of a Single Amount (FV) | AccountingCoachThe present value of $1,000 to be received in 5 years is ________ if the discount rate is 12.78%.R = 10%
T = 2 yrs
Assumption: Let the Amount be A and the Compound Interest be C.I.
A = P{1 + (R/100)}^n
= 5000{1 + (10/100)}²
See Also
Present and Future Value= 5000{1 + (1/10)}²
= 5000{(10 + 1)/10}²
= 5000(11/10)²
= 5000 × 11/10 × 11/10
= ₹6050
A = P + C.I.
=> ₹6050 = ₹5000 + C.I.
=> ₹6050 - ₹5000 = C.I.
=> ₹1050 = C.I.
So, the compound interest on ₹5000 for 2 years at the rate of 10% is ₹1050 .
