Question

Find the compound interest on Rs.8000 for 3 years at 5% per annum.

Answer 1

Principal for the first year = Rs.8000 Rate = 5% per annum T = 1 year
Interest for the first year = $\frac{P\times R\times T}{100}=Rs.\left[\frac{8000\times 5\times 1}{100}\right]=Rs.400$
$\therefore$ Amount at the end of the first year $=Rs.(8000+400)=Rs.8400$

Now principal for the second year = Rs. 8400
Interest for the second year = $\frac{P\times R\times T}{100}=Rs.\left[\frac{8400\times 5\times 1}{100}\right]=Rs.420$
$\therefore$ Amount at the end of the second year = Rs. (8400 + 420) = Rs.8820
Interest for the third year = $\frac{P\times R\times T}{100}=Rs.\left[\frac{8820\times 5\times 1}{100}\right]=Rs.441$
$\therefore$ Amount at the end of the third year $=Rs.(8820+441)=Rs.9261$
Now we know that total C.I. = Amount - Principal $=Rs.(9261-8000)=Rs.1261$
We can also find the C.I. as follows
Total C.I. = Interest for the first year + Interest for the second year + Interest for third year $=Rs.(400+420+441)=Rs.1261$