Question

Mr. Vaishnav borrowed $Rs.18,000$ at a certain rate of interest, compounded annually $at$ the end of one year it amounts to $Rs.18,900$. Calculate
i) The rate of interest per annum.
ii) The interest in the second year.
iii) The amount at the end of the third year.

Answer 1

Compound interest formula

$A=P{(1+\frac{r}{n})}^t$

$P=18000$

$A_1=18900,t=1$ year

$\therefore$ $900=18000$ $\times \frac{r}{100}$

$r=5\%$

Interest in second year= Amount in second year amount in first year

$A_2=18000{(1+\frac{5}{100})}^2$

$19845$

$\therefore$ Interest $=945$

$A_3=18000{(1+\frac{5}{100})}^3$

$A_3=20837.25$