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.

Answer 1

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.