Neena's savings increases by Rs 1,000 every year. If she saves Rs 4,000 in the first year and invests it at 15% compound interest, find her total savings at the end of the third year.

#### Solution

P =Rs. 4,000 ; R = 15% p.a. ; T = 3 years

Interest for the 1st year

`= "Rs" (4000 xx 15 xx 1)/100`

= Rs 600

Principal for the second year

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

= Rs. 4,000 + Rs. 600 +Rs. 5,000 =Rs. 9,600

Interest for the seoond year

`= ("Rs" 9600 xx 15 xx 1)/100`

= Rs 1, 440

Compound interest for seoond year =Rs. 1,440

Principal for the third year

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

=Rs. 9,600 +Rs. 1,440 +Rs. 6000 =Rs. 17.040

Interest for the third year

`= "Rs" (17040 xx 15 xx 1)/100`

= Rs 2,556

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

= Rs. 17,040 +Rs. 2,556 =Rs 19,596