Rajan borrowed a sum of Rs 3600 to install a hand pump in his Dairy if the rate of interest is 11/2% per annum compounded annually determine the interest which Rajan will have to pay after 3 years
Answers
The compound interest that Rajan will have to pay on a sum of Rs.3600 at the rate of (11/2)% p.a after 3 years is Rs. 627.26.
Step-by-step explanation:
Principal, P = Rs. 3600
The rate of interest, R = (11/2)% p.a. compounded annually
Time period, n = 3 years
We know the formula for the amount in compound interest is given by,
Amount = P[1 + R/100]ⁿ
Substituting the given values
⇒ A = 3600 [1 + {(11/2)/100}]³
⇒ A = 3600 * [1 + (11/200)]³
⇒ A = 3600 * [211/200]³
⇒ A = [3600 * 211 * 211 * 211] / [200 * 200 * 200]
⇒ A = Rs. 4227.26
Thus,
The interest which Rajan will have to pay after a period of 3 years is,
= Amount – Principal
= Rs. 4227.26 – Rs. 3600
= Rs. 627.26
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