Wanjiru invests KSh 30000 at 20% per annum compound interest. How much is it worth after 2 years?

Answer and explanation

Correct answer: D. KSh 43200

  1. Step 1: Use A = P(1 + r/100)^n = 30000 x (1.2)^2. Step 2. A = KSh 43200. Answer: KSh 43200. Why not the others: KSh 42000: That uses simple interest, which does not add earlier interest to the amount. KSh 12000: That is only the total simple interest, not the amount. KSh 13200: That is the compound interest earned, without the original sum.

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