Question

Rekha borrowed Rs. 40,000 for 3 years at 10% per annum compound interest. Calculate the interest paid by her for the second year.

Answer 1

For 1st year

Principal = Rs.40,000, Rate = 10%, Time = 1 year

∴ Interest =`(40,000xx10xx1)/100`

= 400 × 10

= Rs.4000

∴ Amount at the end of 1st year = Rs. (40,000 + 4000) = Rs.44,000

For 2nd year

P = Rs.44,000, R = 10%, T = 1 year

∴ Interest = Rs.`(44,000xx10xx1)/100`

= 440 × 10

= Rs.4400

Thus interest earned in the second year = Rs.4400