Question

# Calculate the amount and compound interest on Rs.10,800 for 3 years at 12.5% per annum compounded annually.

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Hint-Make use of the formula and calculate the amount first and from that calculate the compound interest.

Given, Principal =Rs.10,800
Time period=n=3 years
Rate of interest=R=12.5%
To, calculate compound interest let's make use of the formula of amount and calculate it
Amount=A=$P{\left( {1 + \frac{R}{{100}}} \right)^n}$
Let’s substitute these values in the formula
So, we get Amount=A=$10,800{\left( {1 + \frac{{12.5}}{{100}}} \right)^3} \\ = 10,800{\left( {\frac{{112.5}}{{100}}} \right)^3} \\ = 10,800 \times \frac{{112.5}}{{100}} \times \frac{{112.5}}{{100}} \times \frac{{112.5}}{{100}} \\$
So, from this we get Amount =Rs.15377.34
But, we have to calculate the compound interest of this,
So, we can write
Compound Interest=Amount-Principal
=15377.34-10,800
=Rs.4577.34
So, Compound Interest=Rs.4577.34
Note: After finding out the amount , do not stop the solution there, also make sure to find out the compound interest after the amount has been found out