Compound Interest

Compound Interest

Yearly compound interest

Q. Find the compound interest of Rs. 2000 at 20% rate of interest compounded annually for 3 years.

Given:  Principle (P)= Rs. 2000                          Rate (R)= 20%        Time (T)= 3yrs            Compound interest (C.I) = ?

Soln:

(C.I) = P[(1+R/100)^T - 1]                

         = 2000 [ (1+ 20/100)³ - 1)]

         = 2000 [ (1+ 0.2)³ - 1]

         = 2000 [(1.2)³ - 1]

        = 2000 [1.728 -1]

        = 2000 * 0.728

        = 1456

Therefore, C.I for 3 years is Rs.1456.