Calculate the compound interest if K2000 is taken out as loan for 12 months at 5% p.a. compounded annually?

The formula to calculate compound interest is:

A = P(1 + r/n)^(nt)

Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (K2000)
r = the annual interest rate (5% or 0.05)
n = the number of times that interest is compounded per year (1 for annually)
t = the time the money is invested/borrowed for (12 months or 1 year)

Plugging in the values:

A = 2000(1 + 0.05/1)^(1*1)
A = 2000(1 + 0.05)^1
A = 2000(1.05)
A = 2100

Therefore, the compound interest on a K2000 loan for 12 months at 5% p.a. compounded annually is K100.

Formula for Compound Interest:
P - (1 + r/n)^(n-t) - P

where:
- P is the principal amount
- r is the annual interest rate
- n is the number of times interest is compounded per year
- t is the number of years

Given:
- P = K2000
- r = 5% = 0.05
- n = 1 (compounded annually)
- t = 1

Calculation:
K2000 - (1 + 0.05/1)^(1-1) - K2000
= K2000 - (1 + 0.05)^1 - K2000
= K2000 - 1.05 - K2000
= K200 - 0.05
= K100

Therefore, the compound interest for a loan of K2000 at 5% p.a. compounded annually for 12 months is K100.