Question

Rahman lent Rs 16000 to Rasheed at the rate of $12\frac{1}{2}\%$ per annum compound interest. Find the amount payable by Rasheed to Rahman after 3 years.

Answer 1

$$\begin{gathered} \mathrm{Given}: \\ \mathrm{P}=\mathrm{Rs}16,000 \\ \mathrm{R}=12.5\%\mathrm{p}.\mathrm{a}. \\ \mathrm{n}=3\mathrm{years} \\ \mathrm{We}\mathrm{know}\mathrm{that}\mathrm{amount}\mathrm{A}\mathrm{at}\mathrm{the}\mathrm{end}\mathrm{of}\mathrm{n}\mathrm{years}\mathrm{at}\mathrm{the}\mathrm{rate}\mathrm{R}\%\mathrm{per}\mathrm{annum}\mathrm{when}\mathrm{the}\mathrm{interest}\mathrm{is} \\ \mathrm{compounded}\mathrm{annually}\mathrm{is}\mathrm{given}\mathrm{by}\mathrm{A}=\mathrm{P}{\left(1+\frac{\mathrm{R}}{100}\right)}^{\mathrm{n}}. \\ \therefore \mathrm{A}=16,000{\left(1+\frac{12.5}{100}\right)}^3 \\ =16,000{\left(1.125\right)}^3 \\ =22,781.25 \\ \mathrm{Thus},\mathrm{the}\mathrm{required}\mathrm{amount}\mathrm{is}\mathrm{Rs}22,781.25. \end{gathered}$$