Question

Find the CI on ₹20,000 for 3 years at 10% per annum compounded annually.

Answer 1

$C.I.=P{[1+\frac{R}{100}]}^n-P$

where, C.I. is the compound interest, R is the rate of interest per annum, P is the principal and n is the number of years.

Substituting P = ₹20,000, R = 10%, n = 3 years we get

$C.I=20,000[1+\frac{10}{100}{]}^3-20,000$.

$C.I=20,000(\frac{110}{100}{)}^3-20,000$

=$20,000(\frac{110}{100}{)}^3-20,000$

= $20,000\left(\frac{110\times 110\times 110}{100\times 100\times 100}\right)-20,000$

= ₹26,620 - ₹20,000

= ₹6,620

Hence, C.I = ₹6,620