Find the compound interest on rupees 875000 compounded annually if the...
**Compound Interest Calculation**
To calculate the compound interest, we use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment/loan amount
r = annual interest rate (as a decimal)
n = number of times that interest is compounded per year
t = number of years
In this case, we have three successive years with different interest rates. Let's calculate the compound interest for each year:
**Year 1:**
Principal amount (P) = Rs. 875,000
Rate of interest (r) = 2% = 0.02 (as a decimal)
Number of times interest is compounded (n) = 1 (annually)
Number of years (t) = 1
Using the formula:
A = P(1 + r/n)^(nt)
A = 875,000(1 + 0.02/1)^(1*1)
A = 875,000(1 + 0.02)^1
A = 875,000(1.02)
A = Rs. 896,500
The compound interest for the first year is Rs. 896,500 - Rs. 875,000 = Rs. 21,500.
**Year 2:**
Principal amount (P) = Rs. 896,500 (amount after 1 year)
Rate of interest (r) = 4% = 0.04 (as a decimal)
Number of times interest is compounded (n) = 1 (annually)
Number of years (t) = 1
Using the same formula:
A = P(1 + r/n)^(nt)
A = 896,500(1 + 0.04/1)^(1*1)
A = 896,500(1 + 0.04)^1
A = 896,500(1.04)
A = Rs. 932,360
The compound interest for the second year is Rs. 932,360 - Rs. 896,500 = Rs. 35,860.
**Year 3:**
Principal amount (P) = Rs. 932,360 (amount after 2 years)
Rate of interest (r) = 5% = 0.05 (as a decimal)
Number of times interest is compounded (n) = 1 (annually)
Number of years (t) = 1
Using the formula:
A = P(1 + r/n)^(nt)
A = 932,360(1 + 0.05/1)^(1*1)
A = 932,360(1 + 0.05)^1
A = 932,360(1.05)
A = Rs. 978,978
The compound interest for the third year is Rs. 978,978 - Rs. 932,360 = Rs. 46,618.
**Total Compound Interest:**
The total compound interest for three successive years is the sum of the compound interest for each year:
Rs. 21,500 + Rs. 35,860 + Rs. 46,618 = Rs. 104,978.
Therefore, the compound interest on Rs. 875,000 compounded annually at the rates of 2%, 4%, and 5%
Find the compound interest on rupees 875000 compounded annually if the...
Find the CI on 875000 compounder annually if the rate of interest is 2% 4% and 5% respectively for 3 successive years
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