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Find the compound interest of Rs. 50,000 for 3 years. If the rate of interest for three years are 5%, 6%, and 10% p.a. respectively.

A) Rs. 10,800
B) Rs. 12,000
C) Rs. 12,600
D) Rs. 13,500

1 Answer

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Final answer:

To find the compound interest, use the formula A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the rate of interest, n is the number of times interest is compounded per year, and t is the number of years. Calculate the amount after each year and then subtract the principal to find the compound interest.

Step-by-step explanation:

To find the compound interest, we need to use the formula: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the rate of interest, n is the number of times interest is compounded per year, and t is the number of years.

First, let's calculate the amount after 1 year: A = 50000(1 + 0.05/1)^(1*1) = 50000(1 + 0.05) = 52500

Next, let's calculate the amount after 2 years: A = 52500(1 + 0.06/1)^(1*2) = 52500(1 + 0.06)^2 = 55389

Finally, let's calculate the amount after 3 years: A = 55389(1 + 0.1/1)^(1*3) = 55389(1 + 0.1)^3 = 63924

The compound interest is the difference between the final amount and the principal: Compound Interest = 63924 - 50000 = 13924

User Eugene Karataev
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