Question

Mohit invests rs 8000 for 3 years at a certain rate of interest,compounded annually.At the end of one year it amounts to rs 9440
calculate
the rate of interest per annum
Amount at the end of second year

Answer 1

rate of interest= 9440/8000-1=18%

Amount at the end of second year= 8000(1+0.18)^2
=11140 (aprox)

Answer 2

rate of interest
= [(amount after one year-initial amount)/initial amount] x 100
=(9440-8000)/8000] x 100
=18%

Now, by using the formula of compound interest
A = P (1 + r/n) ^(nt)
where
A: amount after n years
P: principle amount
r/n: rate per n year
n: time period in years

The amount at the end of the second year
= 8000(1+0.18)^2
=11139.2
=11140 (approximatly)