Question

49.
If the compound rates of interest for first, second and third
years are 4%, 5% and 6% respectively, on investing Rs 30,000
for 3 years, the amount received by a person will be​

Answer 1

Compound Interest.

Introduction.

Suppose a man who deposit £1000 in a savings account at a interest rate of 10% per annum. At the end of the year he will get £100 interest on his deposit. However, unless he takes out his £100 in cash, it will be added to his original £1000. Thus, if he leaves his money in his account, in the next year the bank will be paying him interest on his original £1000 plus the £100 interest.

This kind of interest is know as Compound Interest. some banks and other Institutions pay interest yearly, others every six or three months.