Question

A man lends ₹12,500 at $12\%$ for the first year, $15\%$ for the second year and $18\%$ for the third year. If the rates of interest are compounded yearly; then find the total amount paid by the man at the end of third year.

Answer 1

Formula for the calculation of amount to be paid for successive rate of interest is :

$A=Principal\times \frac{100+R_1}{100}\times \frac{100+R_2}{100}\times \frac{100+R_3}{100}$
On using above formula, the amount after 3 years is:
$=Principal\times \frac{100+12}{100}\times \frac{100+15}{100}\times \frac{100+18}{100}$

$=₹10,000\times \frac{28}{25}\times \frac{23}{20}\times \frac{59}{50}=₹18,998$

$\therefore$ amount to be paid by him at the end of third year is ₹ 18,998.