Question

The compound interest on Z 10000 at 10% per annum for 3 years, compounded annually, is 

A. Rs. 1331 

B. Rs.3310 

C. Rs.3130 

D. Rs. 13310

Answer 1

Present value, P = Rs.10000 

Interest rate, R = 8% per annum 

Time, n = 3 years 

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

R = Annual interest rate 

n = Time in years] 

∴ A = 10000 (1 + 10/100)³ 

⇒ A = 10000 (1 + 1/10)³ 

⇒ A = 10000 (11/10)³ 

⇒ A = 10000 × 11/10 × 11/10 × 11/10 

⇒ A = 10 × 11 × 11 × 11 

⇒ A = 13310 

∴ Amount = Rs.13310 

∴ Compound interest = Rs.(13310 – 10000) [∵CI = A – P] 

= Rs.3310