Question 70

The compound interest on an amount of ₹5120 at the rate of 12.5% (compounded annually) for 3 years is:

Solution

We know that 12.5% = $$\frac{1}{8}$$

112.5% = $$\frac{9}{8}$$

compound interest = 5120 of (100+12.5)% of (100+12.5)% of (100+12.5)% - 5120

= 5120 of 112.5% of 112.5% of 112.5% - 5120

= $$5120\times\frac{9}{8}\times\frac{9}{8}\times\frac{9}{8}-5120$$

= $$5120\times\frac{729}{512}-5120$$

= 7290-5120

= ₹2170

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