Question

To renovate his shop Mahendra obtained a loan of $Rs.10000$ from a bank. If the rate of interest is $5\%$ per annum compounded annually, calculate interest annually that he will have to pay for $3$ years.

Answer 1

Interest for the $1^{st}$ year $=Rs\frac{10000\times 5\times 1}{100}=Rs500$

Amount after the $1^{st}$ year $=Rs10000+Rs500=Rs10500$

Interest for the $2^{nd}$ year $=Rs\frac{10500\times 5\times 1}{100}=Rs525$

Amount after the $2^{nd}$ year $=Rs10500+Rs525=Rs11025$

Interest for the $3^{rd}$ year $=Rs\frac{11025\times 5\times 1}{100}=Rs551.25$