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Question
Find the compound interest on Rs. 4,000 accrued in three years, when the rate of interest is 8% for the first year and 10% per year for the second and the third years.
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Solution
Interest for the first year = `["P" xx "R" xx "T"]/100`
= `[ 4,000 xx 8 xx 1 ]/100`
= Rs. 3,20
Amount for the first year = Rs. 4,000 + Rs. 3,20 = Rs. 4,320
Interest for the second year = `["P" xx "R" xx "T"]/100`
= `[ 4,320 xx 10 xx 1]/100`
= Rs. 432
Amount for the second year = Rs. 4,320 + Rs. 432 = Rs. 4,752
Interest for the third year = `["P" xx "R" xx "T"]/100`
= `[4,752 xx 10 xx 1]/100`
= Rs. 475.20
Amount for the third year = Rs. 4,752 + Rs. 475.20 = Rs. 5,227.20
So, the compound interest = Rs. 5,227.20 - Rs. 4,000 = Rs. 1,227.20
Hence, the amount will get at the end of the third year is Rs. 1,227.20.
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