Question

A sum of Rs.$25,000$ is invested for $3$ years at $20$ % per annum compound interest. Calculate the interest for the third year.

• A. $6000$
• B. $7200$
• C. $8400$
• D. $5000$

Answer 1

The correct option is B $7200$

Interest for the first year =$\frac{25000\times 1\times 20}{100}=5000$

Amount after first year = $25000+5000=30000$

Interest for second year =$\frac{30000\times 1\times 20}{100}=6000$

Amount after second year = $30000+6000=36000$

Interest for third year =$\frac{36000\times 1\times 20}{100}=7200\left(approx\right)$