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Question
Rahman lent Rs 16000 to Rasheed at the rate of \[12\frac{1}{2} %\] per annum compound interest. Find the amount payable by Rasheed to Rahman after 3 years.
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Solution
Given:
P = Rs 16, 000
R = 12 . 5 % p . a .
n = 3 years
We know that amount A at the end of n years at the rate R % per annum when the interest is
compounded annually is given by A = P\[ \left( 1 + \frac{R}{100} \right)^n . \]
\[ \therefore A = 16, 000 \left( 1 + \frac{12 . 5}{100} \right)^3 \]
\[ = 16, 000 \left( 1 . 125 \right)^3 \]
= 22, 781.25
Thus, the required amount is Rs 22, 781 . 25.
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