2. What will be the sum due on Rs. 5000/- at the end of 3 years at 4% p.a. compound annually. *
Answers
Compound Interest
Formula:
If A be the amount yielded by the sum P compounded annually at the rate of r% for n years, then we have the formula:
A = P (1 + r/100)^n
Given:
- P = Rs. 5000
- r = 4% p.a.
- n = 3 years
Solution:
Putting the values in the above, we get
A = 5000 * (1 + 4/100)^3
= 5000 * (104 / 100)^3
= 5624.32
Answer:
Hence, sum due = Rs. 5624.32
Given : Sum = Rs. 5000/ time 3 years Rate of interest 4 % per annum
To find : Sum due after 3 years
Solution:
P = 5000
R = 4 % pa
n = 3 Years
A = P(1 + R/100)ⁿ
=> A = 5000 ( 1 + 4/100)³
=> A = 5000 ( 26/25)³
=> A = 8 * 26³ /25
=> A = 140608/25
=> A = 5624.32
or using Simple interest
Amount due after 1st year = 5000 + 5000 * 4 * 1 /100 = 5200
Amount due after 2nd year = 5200 + 5200 * 4 * 1/100 = 5408
Amount due after 3rd year = 5408 + 5408 * 4 * 1/100 = 5624.32
sum due on Rs. 5000/- at the end of 3 years at 4% p.a. compound annually. = Rs 5624.32
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