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Question
Manoj saves Rs 5,000 every year and invests it at 12% p.a. compound interest. Calculate his savings at the end of the third year.
Solution
P =Rs. 5,000 ; R = 12% p.a. ; T = 3 years
Interest for the 1st year
=`"Rs" (5000 xx 12 xx 1)/100`
= Rs 600
Principal for the second year
= Amount at the end of one year + his new savings
= Rs. 5,000 + Rs. 600 +Rs. 5,000 =Rs. 10,600
Interest for the seoond year
`="Rs" (10600 xx 12 xx 1)/100`
= Rs 1, 272
Compound interest for seoond year
=Rs. 1,272
Principal for the third year
= Amount at the end of two years + his new savings
=Rs. 10,600 +Rs. 1,272 +Rs. 5,000 =Rs. 16,872
Interest for the third year
`="Rs" (16872 xx 12 xx 1)/100`
= Rs 2, 024.64
Sum due at the end of third year = his savings at the end of third year
= Rs. 16,872 + Rs. 2,024.64 = Rs 18,896.64
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