Find the C.I. on $15, 625$ at $8$ % p.a. for $3$ years compounded annually.

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Solution

We know,
Amount after $3$ years $= P {(1 + \frac{r}{100})}^{3}$
$= 15625 {(1 + \frac{8}{100})}^{3}$
$= 15625 {(1 + \frac{2}{25})}^{3}$
$= 15625 {(\frac{27}{25})}^{3}$
$= 15625 \times \frac{27}{25} \times \frac{27}{25} \times \frac{27}{25}$
$=$ $19, 683$
Now, Compound interest $= A - P = 19, 683 - 15, 625$
$=$ $4, 058$

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