Question

By using the formula, find the amount and compound interest on:

Anand obtained a loan of Rs. 125000 from the Allahabad Bank for buying computors. The bank charges compound interest at $8\%$ per annum compounded annually. What amount will he have to pay after 3 years to clear the debt ?

Answer 1

$\text{Principal (p) = 1,25,000}\text{Rate of interest (r) =}8\%p.a.\text{Period (n) = 3 years}\therefore \text{Amount (A) =}P{(1+\frac{r}{100})}^n=Rs.125000\times {(1+\frac{8}{100})}^3=Rs.125000\times {\left(\frac{27}{25}\right)}^3=Rs.125000\times \frac{27}{25}\times \frac{27}{25}\times \frac{27}{25}=Rs.157464Ans.$