Question

Rs. 10240 for 3 years at 12 (1/2)% per annum compounded annually.

Answer 1

Present value = Rs.10240 

Interest rate = (25/2) % per annum 

Time = 3 years 

Amount (A) = P (1 + R/100)ⁿ [Where, P = Present value 

R = Annual interest rate 

n = Time in years] 

∴ A = 10240 [1 + (25/2)/100]³ 

⇒ A = 10240 [1 + 1/8]³ 

⇒ A = 10240 [9/8]³ 

⇒ A = 10240 × 9/8 × 9/8 × 9/8 

⇒ A = 10240 × 729/512 

⇒ A = 20 × 729 

⇒ A = 14580 

∴ Amount = Rs.14580 

∴ Compound interest = Rs.(14580 – 10240) 

= Rs.4340