What is the compound interest on ₹10000 for 3 years if rate of interest for first, second and third years respectively is $5 %$ , $10 %$ and $20 %$ ?

₹3310

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₹3500

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₹3860

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₹3980

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Solution

The correct option is C ₹3860
Formula for the calculation of compound interest for successive rate of interest is :
$A = P r i n c i p a l \times \frac{100 + R_{1}}{100} \times \frac{100 + R_{2}}{100} \times \frac{100 + R_{3}}{100}$
On using above formula, the amount after 3 years is:
$= P r i n c i p a l \times \frac{100 + 5}{100} \times \frac{100 + 10}{100} \times \frac{100 + 20}{100}$

$= ₹ 10000 \times \frac{21}{20} \times \frac{11}{10} \times \frac{6}{5} = ₹ 13860$

$∴$ Compound interest = ₹13860 – ₹10000 = ₹3860

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What is the compound interest on ₹10000 for 3 years if rate of interest for first, second and third years respectively is 5%, 10% and 20%?

What is the compound interest on ₹10000 for 3 years if rate of interest for first, second and third years respectively is $5 %$ , $10 %$ and $20 %$ ?