A man invests ₹ 46875 at 4% per annum compound interest for 3 years. Calculate:
(i) the amount standing to his credit at the end of the second year.
(ii) the interest for the third year.
(iii) the interest for the first year.
Solution:
It is given that
Principal = ₹ 46875
Rate of interest = 4% p.a.
(i) Interest for the first year = Prt/100
Substituting the values
= (46875 × 4 × 1)/ 100
= ₹ 1875
So the amount after first year or principal for the second year = 46875 + 1875 = ₹ 48750
Here
Interest for the second year = (48750 × 4 × 1)/ 100
So we get
= ₹ 1950
(ii) We know that
Amount at the end of second year = 48750 + 1950
= ₹ 50700
(iii) Interest for the third year = (50700 × 4 × 1)/ 100 = ₹ 2028
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