If 20,000 is deposited for three years at 5% compounded annually, then what
will be the principal for the second year?
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As we know Compound interest of the 1st year is the principal of 2nd year hence
P=20,000
R=5%
Time=1year
Ci=p (1+r/100-1)^n (n=time)
Ci =20,000 (1+5/100 -1)
20000 (100+5/100 -1)
20000×105/100-1
=Rs 1000/-
2nd year P(principal)=20000+1000
=Rs21000/-
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