Question

2. Calculate the interest on 230,000 at 12% per annum compounded annually for 3 years. Hint: First find the interest for three years using CI formula and then find the interest for the remaining half of the year using simple interest formula.)​

Answer 1

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Given -

Principal, Rate of Interest, Time.

To find -

Compound Interest.

Principal = Rs 230000

Rate of interest = 12%

Time = 3 years

We know that Amount in CI =

$P\bigg(\dfrac{1 + r}{100}\bigg) ^{n}$

Here (n) means Time.

Amount =

$P\bigg(\dfrac{1 + r}{100}\bigg) ^{n} \\ = 230000\bigg(\dfrac{1 + 12}{100}\bigg) ^{3} \\ = 230000\bigg(\dfrac{28}{25}\bigg) ^{3} \\ = 230000 \times \frac{21952}{15625} \\ = 323133.44$

Amount is Rs 323133.44

Compound Interest = Amount - Principal

= 323133.44 - 230000

= Rs 93133.44

Hence CI is Rs 93133.44.

Note - I have done this sum by applying Amount formula in Compound Interest because it is a simple way to find CI.