A sum of money amounts to ` 2025 at 12.5% p.a. after 2 years, compounded annually. Findthe sum of money.

To find the sum of money, we need to use the formula for compound interest which is:

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

Where: A = the amount of money accumulated after n years, including interest. P = the principal amount (the initial amount of money) r = annual interest rate (in decimal) n = number of times that interest is compounded per year t = time the money is invested for in years

Given in the problem: A = 2025 r = 12.5% = 0.125 (in decimal) n = 1 (since it is compounded annually) t = 2 years

We can substitute these values into the formula and solve for P:

2025 = P(1 + 0.125/1)^(1*2) 2025 = P(1.125)^2 2025 = P(1.265625)

To find P, we divide both sides by 1.265625:

P = 2025 / 1.265625 P = 1600

So, the sum of money is ` 1600.