Find the compound interest on 3125 for 3 years if the rates of interest for first, second and third year are respectively 4%, 5%, 6% ?

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Solution:

⇨Given
⇨p=3125
⇨r1=4 %
⇨r2=5%
⇨r3=6%
⇨n=3 years
⇨For different rates on successive years, Total amount 'A' will be

$\large A=p\left ( 1+\frac{r_{1}}{100} \right )^{n}\left ( 1+\frac{r_{2}}{100} \right )^{n}\left ( 1+\frac{r_{3}}{100} \right )^{n}$ $\large \Rightarrow A=3125\left ( 1+\frac{4}{100} \right )\left ( 1+\frac{5}{100} \right )\left ( 1+\frac{6}{100} \right )$

$\large \Rightarrow A=3125\left (\frac{104}{100} \right )\left (\frac{105}{100} \right )\left (\frac{106}{100} \right )$

$\large \Rightarrow A=3125\times 1.04\times 1.05\times 1.06$

$\large \Rightarrow A=3617.25$ Rs

⇨Therefore The Compound interest will be

= A- P

=3617.25 - 3125

= 492.5 Rs

Compound Interest: Compound interest is the additional or extra income on the principal amount paid by banks or any other authority.

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Find the compound interest on 3125 for 3 years if the rates of interest for first, second and third year are respectively 4%, 5%, 6% ?

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