A sum of Rs 500 was lent for 2 years at 2% compound interest. Find the interest for twoyears

To calculate compound interest, we use the formula:

A = P (1 + r/n)^(nt)

Where: A = the amount of money accumulated after n years, including interest. P = principal amount (the initial amount of money) r = annual interest rate (in decimal) n = number of times that interest is compounded per year t = time the money is invested for in years

Given in the problem: P = Rs 500 r = 2% per annum = 0.02 (in decimal) n = 1 (since it's compounded annually) t = 2 years

Substituting these values into the formula:

A = 500 (1 + 0.02/1)^(1*2) A = 500 (1 + 0.02)^2 A = 500 * 1.02^2 A = 500 * 1.0404 A = Rs 520.20

The interest for two years is the total amount minus the principal:

Interest = A - P Interest = Rs 520.20 - Rs 500 Interest = Rs 20.20

So, the compound interest for two years is Rs 20.20.