Question

Find the amount and compound interest of ₹ 12500 at 8% per annum for 3 years.

Answer 1

Given:

• Principal (P) = ₹ 12,500
• Rate of interest (r) = 8% per annum
• Time period (n) = 3 years

Step-wise calculation:

1. Formula for Amount (A) when interest is compounded annually:

`A = P(1 + r/100)^n`

2. Substitute the given values:

`A = 12500 xx (1 + 8/100)^3`

`A = 12500 xx (108/100)^3`

3. Calculate:

`A = 12500 xx 108/100 xx 108/100 xx 108/100`

A = 12500 × 1.08 × 1.08 × 1.08

A = 12500 × 1.259712

 A = ₹ 15746.40

4. Compound Interest (C.I.) = Amount – Principal

C.I. = ₹ 15746.40 – ₹ 12500

C.I. = ₹ 3246.40

Hence, the amount and compound interest on ₹ 12,500 at 8% per annum for 3 years are ₹ 15,746.40 and ₹ 3,246.40 respectively.