Question

Calculate the compound interest for the second year on Rs. $8,000/-$ invested for $3$ years at $10$% per annnum.

Answer 1

Compound interest for the second year will be the simple interest gained in the second year, with the amount after first year being the principal for the second year.
For the first year
$P=Rs8,000$
$N=1year$
$R=10$ %
We have $S.I.=\frac{PNR}{100}=\frac{8,000\times 1\times 10}{100}=Rs800$
And Amount at the end of first year $P+S.I.=Rs8,000+Rs800=Rs8,800$
Now, for the second year
$P=Rs8,800$
$N=1year$
$R=10$ %
We have $S.I.=\frac{PNR}{100}=\frac{8,800\times 1\times 10}{100}=Rs880$
Thus, Compound interest for the second year $=Rs880$