Question

Mohan borrowed $Rs.16,000$ for $3$ years at $5\%$ per annum compound interest. Calculate the amount that Mohan will pay at the end of $3$ years to complete the debt.

Answer 1

Given,

Principal $P=Rs.16,000$

Rate of interest $R=5\%$

Time $T=3$ years

So, $n=3$

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

$=Rs.16,000\times {(1+\frac{5}{100})}^3$

$=Rs.16,000\times {(1+\frac{1}{20})}^3$

$=Rs.16,000\times {\left(\frac{21}{20}\right)}^3$

$=Rs.16,000\times \frac{21}{20}\times \frac{21}{20}\times \frac{21}{20}$

$=Rs.18,522$

Hence, Mohan will pay $Rs.18,522$ at the end of $3$ years to complete the debt.