Application of Compound Interest Formula
There are some situations, we use CI formula. Here are a few :
- In a production unit, rate of growth of a product
- To determine population growth (increase or decrease)
The present population of a town is 28000. If it increases at the rate of 5% per annum, what will be its population after 2 years?
The cost of a machine is Rs. 175000. After one year the value of that machine was depreciated by 5%. Find the value of machine after one year.
Principal = Rs. 175000
Reduction = 5% of Rs. 1,75000 per year
Value at the end of 1 year = Rs. 1,75000 - Rs. 8750 = Rs. 1,66,250
Value at the end of 1 year
= Rs. 1,66,250