Question

Shreya won Rs 1250 for standing first in the Std VII exam. She invested that amount as a term deposit in a bank for 3 years at a rate of compound interest of 8 p.c.p.a. What is the amount that she will receive from the bank at the end of the term?

Answer 1

Principal = Rs 1250
Rate of interest = 8% p.a.
Number of years (N) = 3 years
Amount = $\mathrm{P}{\left(1+\frac{\mathrm{R}}{100}\right)}^{\mathrm{N}}$
$$\begin{gathered} =1250{\left(1+\frac{8}{100}\right)}^3 \\ =1250{\left(1+\frac{2}{25}\right)}^3 \\ =1250{\left(\frac{27}{25}\right)}^3 \\ =1250\times \frac{27}{25}\times \frac{27}{25}\times \frac{27}{25} \\ =\mathrm{Rs}1574.64 \end{gathered}$$

∴ Shreya will receive Rs 1574.64 at the end of 3 years.