What will ₹2,575 amount to in 2 years at 20% per year compound interest, compounded annually?

💡 Solution & Explanation

Amount = principal × (1 + rate/100)². After year 1: ₹2,575 × 120/100 = ₹3,090. After year 2: ₹3,090 × 120/100 = ₹3,708. With simple interest it would be only ₹3,605; compounding also earns interest on the first year's interest.