Initial population P = 42,500, Rate of growth r = 2% per annum, Time period n = 2 years

Use the formula for two years successives: $r_1 + r_2 + \frac{r_1 \times r_2}{100}$. Here, $2 + 2 + \frac{2 \times 2}{100} = 4.04\%$. Calculate $4.04\%$ of 42,500, which is $425 \times 4.04 = 1,717$. Add this to 42,500 to get 44,217.

Students often calculate simple interest instead of compound interest, resulting in an incorrect answer of 44,200 ($42,500 + 4\%$ of $42,500$).

This concept is identical to compound interest calculations and is frequently tested in banking exams and CSAT under 'Successive Percentage Changes'.