Question

Find the compound interest on Rs 12000 for 3 years at 10% per annum compounded annually

Answer 1

We know that the amount A at the end of n years at the rate of R % per annum when the interest is compounded annually is given by $A=P{(1+\frac{R}{100})}^n$

Here P = Rs.12000 R = 10% per annum and n = 3
$\therefore$ Amount after 3 years = $P{(1+\frac{R}{100})}^3=Rs.12000\times {(1+\frac{10}{100})}^3=Rs.12000\times {(1+\frac{1}{10})}^3$
$=Rs.12000\times {\left(\frac{11}{10}\right)}^3=Rs.12000\times \frac{11}{10}\times \frac{11}{10}\times \frac{11}{10}=Rs.(12\times 11\times 11\times 11)=Rs.15972$
Now Compound interest = A - P $\Rightarrow$ Compound interest = Rs. 15972 - Rs.12000 = Rs. 3972