Question

Calculate the amount and the compound interest on a sum of 1000 at 10%
p.a. compounded annually for 3 years.​

Answer 1

Answer:1331

Step-by-step explanation:

Here principal = 1000

Interest = 10%

Time = 3 years ,compounded annually

You can do this with the help of formula , but it isnt interesting , so let me explain you in an easy manner

The difference between simple interest and compound interest is that ,in simple interest the principal remains the same whereas in compound interest the principal changes

In this sum for the first year the principal is 1000 rupees

At the end of first year at 10 % interest, 1000 rupees will become 1100 rupees (since 10 % of 1000 is 100).

Now the new principal is 1100 and at the end of second year ..it becomes 1100 + 10% (1100) , that is 1100 +110 = 1210.

Now 1210 is the new principal, and at the end of 3rd year the amount become 1210 + 10% (1210) = 1210 +121 = 1331.

This the principal 1000 rupees compounded annually for 3 years become 1331.

Hope you understand it clearly !