Question

Find the amount and compound interest on ₹ 20000 in 3 years when the rates of interest for three successive years are 10%, 5% and 8% respectively.

Answer 1

Given:

• Principal (P) = ₹ 20000,
• Rates of interest for three successive years = 10%, 5% and 8% respectively,
• Time = 3 years

Step-wise calculation:

1. After 1st year at 10%: 

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

A₁ = 20000 × 1.10

A₁ = ₹ 22000

2. After 2nd year at 5%, on new principal ( A₁): 

`A_2 = A_1 xx (1 + 5/100)`

A₂ = 22000 × 1.05

A₂ = ₹ 23100

3. After 3rd year at 8%, on new principal (A₂):

`A_3 = A_2 xx (1 + 8/100)`

A₃ = 23100 × 1.08

A₃ = ₹ 24948

4. Compound Interest (C.I.):

C.I. = A₃ – P 

C.I. = 24948 – 20000

C.I. = ₹ 4948