Question

If principle is 8000 and time is 2½ year at 15 per annum find the compound interest

Answer 1

Interest for the first year

Principal(P) = 8000

Time(T) = 2½

Rate(R) = 15%p.a

So,

$\sf\small{I=\frac{PRT}{100} = \frac{8000 \times 15 \times 1}{100} = 1200}$

The amount(A) after the first year is 8000+1200=9200

Principal for the second year is 9200

So, the interest for second year is

$\sf\small{\frac{PRT}{100} = \frac{9200\times 15 \times 1}{100} = 1380}$

The amount after the second year is 9200+1200=10580

Principal for ½ year = 10580

So,the interest for ½ year is

$\sf\small{\frac{PRT}{100} = \frac{10580\times\:15 \times\:0.5}{100}=793.5}$

Thus, the final amount is 10580+793.5=11,373.5

Hence, compound interest

= (Final A) - (Original P)

= 11373.5 - 8000=3,373.5