Question

A man lends  Rs. 12,500 at 12% for the first year, at 15% for the second year and at 18% for the third year. If the rates of interest are compounded yearly ; find the difference between the C.I. fo the first year and the compound interest for the third year.

Answer 1

For 1^st year

P = Rs. 12500; R = 12%; T = 1 year

I = `[ 12500 xx 12 xx 1]/100` = Rs. 1500

A = 12500 + 1500 = Rs. 14000

For 2^nd year

P = Rs. 14000; R = 15%; T = 1 year

I = `[14000 xx 15 xx 1]/100` = Rs. 2100

A = 14000 + 2100 = Rs. 16100

For 3^rd year

P = Rs. 16100; R = 18%; T = 1 year

I = `[16100 xx 18 xx 1]/100`= Rs. 2898

A = 16100 + 2898 = Rs. 18,998

Difference between the compound interest of the third year and first year

= Rs. 2893 - Rs. 1500

= Rs. 1398