A sum of ₹1000 is invested on compound interest (compounding annually) for three years. If the rate of interest is 10% per annum for the first two years and 50% per annum for the third year, then what will be the interest?

₹815

From the formula for compound interest, we know,

C.I = P(1+$\frac{R}{100})^t$– P

= 1000 [ 1 + \(\frac{10}{100}\) ]²  × [ 1 + \(\frac{50}{100}\) ] - 1000

= 1000 [ \(\frac{11}{10}\) × \(\frac{11}{10}\) × \(\frac{3}{2}\) - 1 ]

= 1000 [ \(\frac{363}{200}\)  - 1 ]

= 1000 [ \(\frac{163}{200}\) ]

= Rs. 815