Question

Question 7 (ii)
Maria invested Rs 8,000 in a business. She would be paid interest at 5% per annum compounded annually. Find:
(ii) The interest for the third year.

Answer 1

(ii) Here, Principal (P) = Rs 8000, Rate of interest (R) = 5% Time (n) = 3 years
Amount (A) = ${(1+\frac{R}{100})}^n=80000{(1+\frac{5}{100})}^3=80000{(1+\frac{1}{20})}^3$
$=8000{\left(\frac{21}{20}\right)}^3=8000\times \frac{21}{20}\times \frac{21}{20}\times \frac{21}{20}$
=Rs 9,261
Interest for 3rd year = A - P = Rs 9261 - Rs 8820 = Rs 441