What is the compound interest on ₹4,075 for 2 years at 20% per year, compounded annually?

💡 Solution & Explanation

Year 1 interest = 20% of ₹4,075 = ₹815, so the amount becomes ₹4,890. Year 2 interest = 20% of ₹4,890 = ₹978. Total compound interest = ₹1,793. Simple interest would be only ₹1,630; the extra is interest earned on the first year's interest.