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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

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B

Rs. 9261

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C

Rs. 8820

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D

Rs. 820

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Solution

The correct option is A

Rs. 441


Here, Principal (P) = Rs 8000

Rate of interest (R) = 5%

Time (n) = 2years
Amount (A) = P(1+R100)n=80000(1+5100)2=80000(1+120)2
=8000(2120)2=8000×2120×2120
=Rs. 8,820

Time (n) = 3 years
Amount (A) = (1+R100)n=80000(1+5100)3=80000(1+120)3
=8000(2120)3=8000×2120×2120×2120
=Rs. 9,261
Interest for 3rd year = Amount for 3 years - Amount for 2 years = Rs. 9261 - Rs. 8820 = Rs. 441


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