If the rate of interest is 4% for the first year, 5% for the second year and 6% for the third year, then find the compound interest on ₹10,000 for 3 years, if interest is compounded annually?
Answer & explanation
Correct answer: option 2
The Formula that we used here is -
Amount = P$(1 \;+\; \frac{R}{100})^t$
= 10000 [ 1 + \(\frac{4}{100}\)] × [ 1 + \(\frac{5}{100}\)]× [ 1 + \(\frac{6}{100}\)]
= 10000 × [ \(\frac{26}{25}\)] × [ \(\frac{21}{20}\)]× [ \(\frac{53}{50}\)]
= 11575.2
Compound interest = Amount - Principal
= 11575.2 - 10000
= Rs. 1575.20