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Manoj Saves Rs 5,000 Every Year and Invests It at 12% P.A. Compound Interest. Calculate His Savings at the End of the Third Year.

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Question

Manoj saves Rs 5,000 every year and invests it at 12% p.a. compound interest. Calculate his savings at the end of the third year.

Sum
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Solution

P =Rs. 5,000 ; R = 12% p.a. ; T = 3 years

Interest for the 1st year 

=`"Rs"  (5000 xx 12 xx 1)/100`

= Rs 600 

Principal for the second year

= Amount at the end of one year + his new savings

= Rs. 5,000 + Rs. 600 +Rs. 5,000 =Rs. 10,600

Interest for the seoond year 

`="Rs"  (10600 xx 12 xx 1)/100`

= Rs 1, 272 
Compound interest for seoond year 
=Rs. 1,272

Principal for the third year

= Amount at the end of two years + his new savings

=Rs. 10,600 +Rs. 1,272 +Rs. 5,000 =Rs. 16,872

Interest for the third year 

`="Rs"  (16872 xx 12 xx 1)/100`

= Rs 2, 024.64

Sum due at the end of third year = his savings at the end of third year

= Rs. 16,872 + Rs. 2,024.64 = Rs 18,896.64

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Concept of Compound Interest - Compound Interest as a Repeated Simple Interest Computation with a Growing Principal
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