Question

Find the amount and the compound interest on Rs 15625 for 3 years at 12% per annum, compounded annually.

Answer 1

$$\begin{gathered} \mathrm{Principal}\mathrm{for}\mathrm{the}\mathrm{first}\mathrm{year}=\mathrm{Rs}.15625 \\ \mathrm{Interest}\mathrm{for}\mathrm{the}\mathrm{first}\mathrm{year}=\mathrm{Rs}.\left(\frac{15625\times 12\times 1}{100}\right)=\mathrm{Rs}.1875 \\ \mathrm{Amount}\mathrm{at}\mathrm{the}\mathrm{end}\mathrm{of}\mathrm{the}\mathrm{first}\mathrm{year}=\mathrm{Rs}.(15625+1875)=\mathrm{Rs}.17500 \\ \mathrm{Principal}\mathrm{for}\mathrm{the}\mathrm{second}\mathrm{year}=\mathrm{Rs}.17500 \\ \mathrm{Interest}\mathrm{for}\mathrm{the}\mathrm{second}\mathrm{year}=\mathrm{Rs}.\left(\frac{17500\times 12\times 1}{100}\right)=\mathrm{Rs}.2100 \\ \mathrm{Amount}\mathrm{at}\mathrm{the}\mathrm{end}\mathrm{of}\mathrm{the}\mathrm{second}\mathrm{year}=\mathrm{Rs}.(17500+2100)=\mathrm{Rs}.19600 \\ \mathrm{Principal}\mathrm{for}\mathrm{the}\mathrm{third}\mathrm{year}=\mathrm{Rs}.19600 \\ \mathrm{Interest}\mathrm{for}\mathrm{the}\mathrm{third}\mathrm{year}=\mathrm{Rs}.\left(\frac{19600\times 12\times 1}{100}\right)=\mathrm{Rs}.2352 \\ \mathrm{Amount}\mathrm{at}\mathrm{the}\mathrm{end}\mathrm{of}\mathrm{the}\mathrm{second}\mathrm{year}=\mathrm{Rs}(19600+2352)=\mathrm{Rs}.21952 \\ \therefore \mathrm{Compound}\mathrm{interest}=\mathrm{Rs}.\left(21952-15625\right)=\mathrm{Rs}.6327 \end{gathered}$$