Question

Maria invested Rs. 8000 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.542
• C. Rs.356
• D. Rs.440

Answer 1

Answer: (A)

Rs.441

Here $P=Rs.8000,R=5\%$per annum and $n=2$ years.

$\therefore$ Amount after $2$ years $=P{(1+\frac{R}{100})}^n$

Amount after $2$ years $=Rs.[8000\times {(1+\frac{5}{100})}^2]$

Amount after $2$ years $=Rs.(8000\times \frac{105}{100}\times \frac{105}{100})=Rs.8820$
Now, the principal for the third year will be the amount at the end of the second year.

$Interest=\frac{P\times R\times T}{100}$

$Interest=\frac{8820\times 5\times 1}{100}$ $=$ $Rs441$