Question

Mohan borrowed Rs. 16000 for 3 years at 5% per annum compound interest. Calculate the amount that Mohan will pay at the end of 3 years.

Answer 1

For 1st year
Principal (P) =Rs. 16000, Rate(R) =5%
Time(T)=1 year
$\therefore$ Interest= $\frac{16000\times 5\times 1}{100}=160\times 5=Rs.800$
$\therefore$ Amount at the end of 1st year=Rs. (16000+800)+Rs. 16800
For 2nd year
P= Rs. 16800, R= 5%, T= 1 year
$\therefore$ Interest= $\frac{16800\times 5\times 1}{100}=168\times 5=Rs.840$
$\therefore$ Amount at the end of 2nd year=Rs. (16800 +840) =Rs. 17640
For 3rd year
P=17640, R=5%, T=1 year
$\therefore$ = $\frac{17640\times 5\times 1}{100}=\frac{1764}{2}=Rs.882$
$\therefore$ Amount at the end of 3rd year= Rs. (17640+882)=Rs. 18522
Hence required amount=Rs. 18522