Question

Calculate the amount to be paid at the end of 3 years for a principal of Rs 5,000 lent at an interest of 5% per annum compounded annually.

• A. Rs 5, 512.5
• B. Rs, 5, 788.125
• C. Rs 5,250
• D. Rs 5,360.18

Answer 1

The correct option is B Rs, 5, 788.125

Interest for the $1^{st}$ year = 5,000 $\times 5\%=Rs250$
Thus, Amount = Principal + Interest = Rs 5,250

Interest for the $2^{nd}$ year = 5,250 $\times 5\%=Rs262.5$
Thus, Amount = Principal + Interest = Rs 5,512.5

Intrest for the $3^{rd}$ year = 5,512.5 $\times 5\%$ Rs 275.625
Thus, Amount = Principal + Interest = Rs 5.788.125.