Question

Three years ago, Beeru purchased buffalo from Surjeet for Rs. 11000. What payment discharges his debt now, the rate of interest is 10 % per annum, compounded annum.

Answer 1

Hint: To solve this question, we should have some knowledge of compound interest and we should know the formula of compound interest, that is \[A=P{{\left( 1+\dfrac{r}{100} \right)}^{n}}\], where A is the final amount after interest is applied, P represents the principal amount, r represents the rate of interest and n represents the number of times the interest applied per time period.

Complete step-by-step answer:
In this question, we are asked to find the amount Beeru has to pay after 3 years when the interest applied is the interest of rate of 10 %. To solve this question, we should know the formula of compound interest which is \[A=P{{\left( 1+\dfrac{r}{100} \right)}^{n}}\] where A is the final amount, P is the principal amount, r is the rate of interest applied and n is the number of times the interest is applied per time period.
From the given question, we can see that P = Rs. 11000, r = 10 % and n = 3. By using these values, we will find the value of A. So, we can write it as,
\[A=11000{{\left( 1+\dfrac{10}{100} \right)}^{3}}\]
Now, we will simplify it further by applying arithmetic operations. So, we will get,
\[A=11000{{\left( \dfrac{100+10}{100} \right)}^{3}}\]
\[A=11000{{\left( \dfrac{110}{100} \right)}^{3}}\]
\[A=11000{{\left( \dfrac{11}{10} \right)}^{3}}\]
\[A=11000\times \dfrac{11}{10}\times \dfrac{11}{10}\times \dfrac{11}{10}\]
\[A=11\times 11\times 11\times 11\]
A = Rs. 14641
Therefore, we can say that the amount Beeru has to pay after 3 years is Rs. 14641.

Note: In this question, there are high possibilities that we might end up with calculation mistakes because we have large numbers to calculate. Also, we have to remember that compound interest is calculated by using the formula,
\[A=P{{\left[ 1+\dfrac{r}{100} \right]}^{n}}\]
where A is the final amount, P is the principal amount and r is the rate of interest and n is the number of times interest is applied per time period.