Question

Maria invested Rs 8,000 in a business. She would be paid interest at 5% per annum compounded annually. Find the interest for the third year.

• A. Rs. 441
• B. Rs. 9261
• C. Rs. 8820
• D. Rs. 820

Answer 1

The correct option is A

Rs. 441

Here, Principal (P) = Rs 8000

Rate of interest (R) = 5%

Time (n) = 2years
Amount (A) = $P{(1+\frac{R}{100})}^n=80000{(1+\frac{5}{100})}^2=80000{(1+\frac{1}{20})}^2$
$=8000{\left(\frac{21}{20}\right)}^2=8000\times \frac{21}{20}\times \frac{21}{20}$
=Rs. 8,820

Time (n) = 3 years
Amount (A) = ${(1+\frac{R}{100})}^n=80000{(1+\frac{5}{100})}^3=80000{(1+\frac{1}{20})}^3$
$=8000{\left(\frac{21}{20}\right)}^3=8000\times \frac{21}{20}\times \frac{21}{20}\times \frac{21}{20}$
=Rs. 9,261
Interest for 3rd year = Amount for 3 years - Amount for 2 years = Rs. 9261 - Rs. 8820 = Rs. 441