Question

find the compound interest on rupees 125000 three years at 4% interest per annum​

Answer 1

Principal = Rs. 125,000

Time = 3 years

Rate = 4% p.a.

Method 1:-

Interest for 1st year = Rs. 125,000×4×1 / 100 = Rs. 5,000

Amount = Rs. 125,000 + Rs. 5,000 = Rs. 130,000

Amount of 1st year = Principal for 2nd year.

Interest for 2nd year = Rs. 130,000×4×1/100 = Rs. 5,200

Amount = Rs. 130,000 + Rs. 5,200 = Rs. 135,200

Amount of 2nd year = Principal for 3rd year.

Interest for 3rd year = Rs. 135,200×4×1/100 = Rs. 5,408

Amount = Rs. 135,200 + Rs. 5,408 = Rs. 140,608

.•. Compound Interest = Rs. 140,608 - Rs. 125,000

= Rs. 15,608.

Method 2:-

Amount = Principal ( 1+ rate/100 ) ^time

= Rs. 125,000 ( 1+ 4/100 ) ^3

= Rs. 125,000 ( 26/25 ) ^3

= Rs. 125,000 × 26/25 × 26/25 × 26/25

= Rs. 140,608

.•. Compound Interest = Rs. 140,608 - Rs. 125,000

= Rs. 15,608.