Question

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

• A. ₹ 6,620
• B. ₹ 6,000
• C. ₹ 26,620
• D. ₹ 26,000​

Answer 1

The correct option is A

₹ 6,620

We know that,
for a principal P, rate of interest R and time n years,
amount, A = $P{[1+\frac{R}{100}]}^n$

Here, P = ₹ 20,000, R = 10% and n = 3 years.

$\text{So,}A=20,000{[1+\frac{10}{100}]}^3=20,000\times [\frac{110}{100}{]}^3$
= ₹ 26,620

Compound interest, C.I. = Amount - Principal

C.I. = ₹ 26,620 - ₹ 20,000 = ₹ 6,620