Question

Find the amount and compound interest on ₹ 40000 for 3 years if the rates of interest for successive years are 10%, 6% and 5%.

Answer 1

Given:

• Principal, (P = ₹ 40000)
• Time period = 3 years
• Rates of interest for successive years: 10%, 6%, and 5%

Step-wise calculation:

1. For first year at 10%:

`A_1 = P xx (1 + 10/100)`

A₁ = 40000 × 1.10

A₁ = ₹ 44000

2. For second year at 6%, principal is (A₁):

`A_2 = A_1 xx (1 + 6/100)`

A₂ = 44000 × 1.06

A₂ = ₹ 46640

3. For third year at 5%, principal is (A₂): 

`A_3 = A_2 xx (1 + 5/100)`

A₃ = 46640 × 1.05

A₃ = ₹ 48972

Amount after 3 years (A = ₹ 48972)

Compound Interest (CI) = Amount – Principal

CI = 48972 – 40000

CI = ₹ 8972