Question

Calculate the amount and the compound interest on Rs. 7,500 in 3 years when the rate of interest for successive years is 5%, 8% and 10% respectively.

Answer 1

The formula goes like this:

Future value = Present Value *( 1+ r/n)^nt

Where,

r = yearly rate of interest

n = Number of compounding periods a year.

t = number of years.

Plugging in the values,

FV = 6000 * ( 1+0.10/2)^(2*2)

FV= 6000 * (1.05)^4

FV = 6000 * 1.21156

FV= 7293.

So the accrued compound interest is 7293–6000= 1293.