Question 53

How much will a principal of ₹5000 invested on compound interest (compounded annually) amount to, in three years at a rate of 50% per annum?

Solution

$$A=P\left(1+\frac{R}{100}\right)^N$$

A = amount, P = principal amount, R = rate of interest, N = time.

$$=5000\left(1+\frac{50}{100}\right)^3$$

$$=5000\left(1+\frac{1}{2}\right)^3$$

$$=5000\left(\frac{3}{2}\right)^3$$

$$=5000\times\frac{27}{8}$$

= ₹16,875

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