Compound Interest Calculation Explained
The question asks for the compound interest (CI) on a principal amount (P) of Rs. 25,000 over a time period (n) of 3 years at an annual interest rate (r) of 10%.
Compound Interest Formula
The formula to calculate the final amount (A) including compound interest is:
A = P \left(1 + \frac{r}{100}\right)^n
The compound interest (CI) is the difference between the final amount (A) and the principal (P):
CI = A - P \quad \text{or} \quad CI = P \left[ \left(1 + \frac{r}{100}\right)^n - 1 \right]
Step-by-Step Calculation
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Substitute the given values into the formula:
P = 25,000
r = 10%
n = 3
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Calculate the amount (A):
A = 25,000 \left(1 + \frac{10}{100}\right)^3
A = 25,000 \left(1 + 0.1\right)^3
A = 25,000 \left(1.1\right)^3
A = 25,000 \times 1.331
A = 33,275
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Calculate the compound interest (CI):
CI = A - P
CI = 33,275 - 25,000
CI = 8,275
Therefore, the compound interest is Rs. 8,275.
Similar Questions
- What is the compound interest on a sum of Rs. 12,500 at 15% p.a. in 2 years, if the interest is compounded 8-monthly?
- A certain amount increases to five times its initial value after 10 years of compounding interest. How many years will it take for it to grow to twenty-five times its original amount?
- A vendor lends 74,000 rupees at a rate of 12% compound interest per annum, compounded annually. Find the interest for the 3rd year.
- A sum of money invested at compound interest amounts to twice itself in 4 years. In how many years will it become 8 times itself?
- What is the compound interest on Rs. 8000 for 2 year at 10% per annum?
- The compound interest on a certain sum for 3 years at 20% per annum is ₹864. Find the simple interest on the same sum at the same rate and period.
A sum of money becomes three times itself in 3 years at compound interest.
What is the rate of interest?
- If the amount is Rs. 600 and the Principal is Rs. 450, which is compounded yearly for 1 year, calculate the rate of interest.
- A certain sum amounts to Rs. $1,600$ in two years and to Rs. $2,000$ in three years at compound interest when compounded annually. Find the rate of interest.
- What will be the amount to be paid at the end of 5 years on Rs. 4500 at 10% per annum compounded annually?
Important Questions from Compound Interest
The certain sum amounts to Rs. 9,982.50 in \(2\frac{1}{2}\) years at 12% p.a., interest compounded 10-monthly. The sum (in Rs.) is:
The difference between the simple interest and the compound interest compounded annually on a certain sum of money for 2 years at a rate of 8% per annum is Rs. 16.80. Find the principle amount.
If a sum of ₹ 2000 is lent at 10% p.a. compound interest, what is the interest for the second year?
A sum becomes 5 times of itself in 3 years. at compound interest (interest is compounded annually). In how many years. will the sum becomes 125 times of itself?
If the compound interest on a certain sum of money for two years at 9% p.a. is Rs. 3,762, then the sum is:
