Question

A bank pays interest at the rate of $8\%$ per annum compounded yearly. Find the interest by simple interest method if $Rs.8000$ was deposited for $3$ years.

• A. $Rs.1000$
• B. $Rs.2077.7$
• C. $Rs.2000$
• D. $Rs.3456$

Answer 1

The correct option is B $Rs.2077.7$

$P=Rs.8000,R=8$%, Time period$=3$ years

Interest in $1$st year $=\frac{P\times R\times T}{100}$

$=\frac{8000\times 8\times 1}{100}$

$=Rs.640$

Principal amount for $2$nd year will be,

$P^{\prime }=P+640$

$=Rs.8000+Rs.640$

$=Rs.8640$

Interest in $2$nd year$=\frac{8640\times 8}{100}$

$=Rs.691.2$

Principal amount for $2$nd year will be,

$P^{\prime \prime }=P^{\prime }+691.2$

$=Rs.8640+Rs.691.2$

$=Rs.9331.2$

Interest in $3$rd year $=\frac{9331.2\times 8}{100}$

$=Rs.746.5$

So, total interest $=640+691.2+746.5$

$=Rs.2077.69$

$\approx Rs.2077.7$