What is the compound interest (in Rs.) on Rs.80,000 for 3 years when the rate of interest is 5%, 8% and 10% per annum for the 3 successive years, the interest being compounded annually?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e. 19,792.
Amount(A) = P(1 + )T
here, P = Princip[al, R = Rate, T = Time
After 1st year (5%):
⇒ A1 = 80000 × (1 + )1 = 80000 × 1.05 = 84000
After 2nd year (8%):
⇒ A2 = 84000 × (1 + )1 = 84000 × 1.08 = 90720
After 3rd year (10%):
⇒ A3 = 90720 × (1 + )1 = 90720 × 1.10 = 99792
Compound Interest = Final Amount − Principal
⇒ 99792 - 80000 = 19792