Question

Maria invested ₹8,000 in a business. She would be paid interest at 5% per annum compounded annually. Find
(A) The amount credited against her name at the end of the second year.
(B) The interest for the 3rd year.

Answer 1

(A) Principal (P) = ₹8,000
Rate (R) = 5%
Number of years (n) = 2 years
$\therefore \text{Amount (A)}=P{(1+\frac{R}{100})}^n$
$=[8,000{(1+\frac{5}{100})}^2]$
$=[8,000{\left(\frac{105}{100}\right)}^2]$
$=₹8,820$

(B) The interest for the next one year, i.e., third year, has to be calculated.
By taking ₹8,820 as principal, the SI for next year can be calculated.
$S.I.=\frac{P\times R\times T}{2}=\frac{8,820\times 5\times 1}{2}=₹441$