Question

Calculate the compound interest for the second year on 5000 invested for 3 years at 20% p.a. Also find the sum due at the end of third year.

Answer 1

Answer:

Compound interest for the second year will be the simple interest gained in the second year, with the amount after first year being the principal for the second year.

For the first year

P=Rs8,000

N=1year

R=10 %

We have S.I.=

100

PNR

= 100

8,000×1×10

=Rs800

And Amount at the end of first year P+S.I.=Rs8,000+Rs800=Rs8,800

Now, for the second year

P=Rs8,800

N=1year

R=10 %

We have S.I.=

100

PNR

= 100

8,800×1×10

=Rs880

Thus, Compound interest for the second year =Rs880

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