A sum of rs 18,000 is lent at 10% p.
a. Compound interest, compounded annually. What is the difference between the compound interest for 3rd year and 4th year?
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Difference between the compound interest for third and fourth year = Rs. 217.8
P = principal amount = Rs. 18000
rate % = 10% per annum.
Amount after n years = P(1+r/100)^n
Amount at the end of 2 years = 1800 × (1+10/100)^2
= Rs. 21780
Amount at the end of 3 years = 1800 × (1+10/100)^3
= Rs. 23958
Amount at the end of 4 years = 1800 × (1+10/100)^4
= Rs. 26353.8
interest for third year = amount after 3 years - amount after 2 years
= 23958 - 21780
= Rs. 2178
interest for fourth year = amount after 4 years - amount after 3 years
= 26353.8 - 23958
= Rs. 2395.8
Difference between the compound interest for third and fourth year = 2395.8 - 2178
= Rs. 217.8
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