Question

Monika borrowed rupees 4096 from Shalini for 3 years at 6 1 / 4% per annum find the amount and the compound interest paid by her to Shalini after 3 years if the interest is compounded annually

Answer 1

Compounded interest means that the interest is not only earned on the principal amount, but also on previous interests.

Total amount after three years = $Pe^{rt}$, where P is the principal amount, r is the percentage of interest per year and t is the number of years.

Therefore, total amount after 3 years =$4096e^{0.0625*3}=4940.7\:rs$

Compound interest is the difference between the amount after 3 years and the principal amount= 4940.7-4096 = 844.7 rs