Question

Rekha borrowed Rs. 40000 for 3 years at 10% per annum compound interest. Claculate the interest paid by her for the second year.

Answer 1

For 1st year
Principal =Rs. 40000, Rate =10%, Time =1 year
$\therefore$ Interest= $\frac{40000\times 10\times 1}{100}=400\times 10=Rs.4000$
$\therefore$ Amount at the end of 1st year= Rs. (40000+4000)=Rs. 44000
For 2nd year
P= Rs. 44000,R= 10%, T= 1 year
$\therefore$ Interest= Rs. $\frac{44000\times 10\times 1}{100}=440\times 10=Rs.4400$
Thus interest earned in the second year=Rs. 4400