Question

Maria invested $8000$ Rs in a business. She would be paid interest at $5\%$ per annum compounded annually. Find :
(i) The amount credited against her name at the end of the second year.
(ii) The interest for the 3rd year.

Answer 1

The formula for the compound interest,when interest is compound annually

$Amount=P{(1+\frac{R}{100})}^n$

where P = Principal amount

R = Rate of interest in percentage

n = Number of years

(i)

Given, $P=8000Rs.,R=5,n=2$

Amount credited after end of second year

$=8000{(1+\frac{5}{100})}^2=Rs.8820$

(ii)

Given, $P=8000Rs.,R=5,n=3$

Amount credited after the end of third year

$=8000{(1+\frac{5}{100})}^3=Rs.9261$

So, the interest for the third year = Amount credited after the end of $3^{rd}$ year - Amount credited after the end of $2^{nd}$ year

$=9261-8820=Rs.441$