Question

Find CI paid when a sum of Rs. 10,000 is invested for 1 year and 3 months at `8 1/2%` per annum compounded annually.

Answer 1

1 year 3 months = `1 3/12 "year" = 1 1/4 "years"`

A = ₹ `10000(1 + 17/200)^(1 1/4)`

Find the amount for the whole part, i.e., 1 year in this case.

A = ₹ `10000(1 + 17/200)`

A = ₹ `10000 xx 217/200 ` = ₹ 10,850

Now this would act as principal for the next `1/4` year.

SI = ₹ `(10850 xx 1/4 xx 17)/(100 xx 2)`

 

SI = ₹ `(10850 xx 1 xx 17)/(800)` = Rs. 230.56

 

Interest for first year = ₹ 10850 - ₹ 10000 = ₹ 850

And, interest for the next `1/4` year = ₹ 230.56

Therefore, total compound Interest = 850 + 230.56 = ₹ 1080.56.