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