Question

Calculate the amount and compound interest on Rs 20000 for 3 years at 10% per annum, interest being payable annually.

Answer 1

Here P₁ = Rs.20000 and r = 10%
So, Amount after 1 year
= ${\displaystyle \text{P}(1+\frac{\text{r}}{100})}$

= ${\displaystyle 20000(1+\frac{10}{100})}$

= ${\displaystyle 20000\times \frac{110}{100}}$ = 22000
Thus, P₂ = Rs.22000 and r = 10%
Amount after 2 year 
= ${\displaystyle \text{P}(1+\frac{\text{r}}{100})}$

= ${\displaystyle 22000(1+\frac{10}{100})}$

= ${\displaystyle 22000\times \frac{110}{100}}$ = 24200
Thus, P₃ = Rs.24200 and r = 10%
Amount after 3 year
= ${\displaystyle \text{P}(1+\frac{\text{r}}{100})}$

= ${\displaystyle 24200(1+\frac{10}{100})}$

= ${\displaystyle 24200\times \frac{110}{100}}$ = 26620
Hence, Amount = Rs.26620
Also, C.I.
= A - P
= Rs.26620 - Rs.20000
= Rs.6620.