Question

sum of rs 25000 was given as a loan on compound intrest for 3 years compounded annualy at 5% per annum during the first year.6%per annum during the second year and 8 %per annum during the third year find the compound intrest.
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Answer 1

Given:

Present value =₹ 25000

Interest rate for the first year, p=5% per annum

Interest rate for the second year, q=6% per annum

Interest rate for the third year, r=8% per annum

To find the amount we have the formula,

Amount (A)=P(1+(r/100))

n

where P is present value, r is rate of interest, n is time in years

Since here we have variable rates, we modify the formula to get:

Amount (A)=P×(1+p/100)×(1+q/100)×(1+r/100)

Now substituting the values in above formula we get,

∴A=25000×(1+5/100)×(1+6/100)×(1+8/100)

⇒A=25000×(105/100)×(106/100)×(108/100)

$$\Rightarrow A = 21 × 53 × 27$$

⇒A=₹ 30051

∴ Compound interest =A–P

=30051–25000=₹ 5051