Question

Find the difference of the compound and simple interest ₹46,875 at the rate of interest of 4% per annum compounded annually for 3 years
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Answer 1

Given :- Aman invests ₹46875 at 4% per annum compound interest for 3 years.

Calculate :-

• The interest for the first year.

• The amount standing to his credit at the end of the second year.

• The interest for the third year.

Solution :-

➤Principal = ₹46875

• Rate = 4% per annum compounded annually.

⇒Time = 3 years.

We know that,

For First Year CI and SI both are same.

⇒SI = (P * R * T) / 100 .

So,

→ The interest for the first year = (46875 * 4 * 1)/100 = ₹1875 (Ans.i)

Now,

→ Amount after the first year = Principal for the second year = P + SI = 46875 + 1875 = ₹48750 .

So,

→ SI for second year = (48750 * 4 * 1)/100 = ₹1950 .

Then,

→ Amount at the end of second year = Principal for the second year + SI for second year = 48750 + 1950 = ₹50700 (Ans.ii)

Therefore,

→ Principal for third year = Amount at the end of second year = ₹50700

Hence,

→ The interest for the third year = (50700 * 4 * 1)/100= ₹2028