Question

Find the CI on $₹$20,000 for 3 years at 10% per annum compounded annually.
(2 marks)

Answer 1

$CI=P{[1+\frac{R}{100}]}^n-P$
(0.5 mark)

Where, CI 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,

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

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

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

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

= $₹$26,620 - $₹$20,000

= $₹$6620

Therefore, CI = $₹$6620
(1.5 marks)