Question: A sum of Rs. 10000 is invested at a compound interest rate of 10% for 2 years. What will be the amount after the mentioned period?

Solution:

Apply the net% effect formula which says:

Net % effect = x + y + (xy)/100

Here, x and y are the interest that goes same for both the years and (xy)/100 is the part that will give us the additional interest we are gaining through compounding.

Therefore, net % rate of interest = 10 + 10 + 100/100 = 21%

Hence the amount which will be 121% of the sum = Rs. 12100

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