Final answer:
To calculate compound interest on Rs. 17,000 at an 8.5% annual rate, use the formula A = P(1 + r/n)^(nt) and subtract the principal from the total amount calculated. For one year with interest compounded annually, the compound interest would be Rs. 1,445. For multiple years, adjust the time variable accordingly.
Step-by-step explanation:
To calculate the compound interest on Rs. 17,000 at an 8.5% rate of interest per annum, we will use the compound interest formula, which is A = P (1 + r/n)^(nt) where:
- A is the amount of money accumulated after n years, including interest.
- P is the principal amount (the initial amount of money).
- r is the annual interest rate (decimal).
- n is the number of times that interest is compounded per year.
- t is the time the money is invested for in years.
We do not have the specific number of years (t) for this problem, so we'll assume the interest is compounded annually (n=1) and show the formula for one year to illustrate the process:
A = 17,000 (1 + 0.085/1)^(1*t)
For one year (t=1), it would be:
A = 17,000 (1 + 0.085)^1
A = 17,000 (1.085)
A = Rs. 18,445
The total compound interest earned in one year would be the final amount minus the initial principal:
Compound Interest = A - P
Compound Interest = Rs. 18,445 - Rs. 17,000
Compound Interest = Rs. 1,445
For multiple years, you would change the value of t to the number of years and calculate A accordingly. The compound interest would then be A - P for that new amount.