Question

Calculate the amount and compound interest on Rs.10,800 for 3 years at 12.5% per annum compounded annually.

Answer 1

Hint-Make use of the formula and calculate the amount first and from that calculate the compound interest.

Complete step-by-step answer:
Given, Principal =Rs.10,800
            Time period=n=3 years
            Rate of interest=R=12.5%
To, calculate compound interest let's make use of the formula of amount and calculate it
Amount=A=$P{\left( {1 + \frac{R}{{100}}} \right)^n}$
Let’s substitute these values in the formula
So, we get Amount=A=$
  10,800{\left( {1 + \frac{{12.5}}{{100}}} \right)^3} \\
   = 10,800{\left( {\frac{{112.5}}{{100}}} \right)^3} \\
   = 10,800 \times \frac{{112.5}}{{100}} \times \frac{{112.5}}{{100}} \times \frac{{112.5}}{{100}} \\ $
So, from this we get Amount =Rs.15377.34
But, we have to calculate the compound interest of this,
So, we can write
Compound Interest=Amount-Principal
                                  =15377.34-10,800
                                 =Rs.4577.34
So, Compound Interest=Rs.4577.34
Note: After finding out the amount , do not stop the solution there, also make sure to find out the compound interest after the amount has been found out