Question

2. Saina deposited ` 1,00,000 in a nationalized bank for three years. If the rate of interest is 7% p.a., calculate the interest that bank has to pay to Saina after three years if interest is compounded annually. Also calculate the amount at the end of third year.​

Answer 1

COMPOUND INTEREST

Sum of money is 1,00,000

Rate of interest at which the sum is compounded annually is 7%.

The amount  that bank will pay her will be calculated using this formula,

$A = P(1 + \frac{r}{100} )^t$

where A is the amount ,

P is the sum of money or the principal amount,

r is the rate of interest,

t is the time period

Hence,

$A = 100000(1 + \frac{7}{100} )^3\\\\\implies A=122504.3$

So, amount that Saina will be getting at the end of 3 years is 122504.3.

Hence the interest that the bank will pay to her at the end of three years is,

$A-P=122504.3-100000=22504.3$

So, bank gave 22504.3 as a interest that was compounded annually.