Question

Calculate the amount and compound interest on $Rs.10,800$ for $3$ years at $12\frac{1}{2}$% per annum compounded anually.

Answer 1

Interest for first year $=\frac{10800\times 25\times 1}{100\times 2}=1350$ ......Simple Interest$=\left(\frac{P\times N\times R}{100}\right)$

Amount after first year $=10800+1350=12150$

Interest for second year $=\frac{12150\times 25\times 1}{100\times 2}=1518.75$

Amount after second year $=12150+1518.75=13668.75$

Interest for third year $=\frac{13668.75\times 25\times 1}{100\times 2}=1708.59375$

Amount after third year $=13668.75+1708.59375=15377.34375$

Compound interest $=15377.34375-10800=4577.34375$