Question

What is the compound interest on ₹5000, if the amount is given for 3 years at the rate of interest of 10% compounded annually.

• A. ₹ 1655
• B. ₹ 6655
• C. ₹ 1450
• D. ₹ 6450

Answer 1

The correct option is A ₹ 1655

Principal amount P $=₹5000$
Rate of interest R $=10\%$
Time period T $=3$ years
We know, $A=p(1+\frac{r}{100}{)}^n$
Where, A is the amount to be paid after n years

$A=5000(1+\frac{10}{100}{)}^3$
$A=5000(1+\frac{1}{10}{)}^3$
$A=5000\times {\frac{11}{10}}^3$
$A=5000\times \frac{11\times 11\times 11}{10\times 10\times 10}$
$A=5\times 11\times 11\times 11$
$A=₹6655$
Compound interest = Amount - Principal amount
Compound interest $=₹6655-₹5000=₹1655$