To calculate the compound interest on a sum of Rs. 25,000 after 3 years at an interest rate of 12% per annum compounded annually, use the formula:
Compound Interest=P×((1+r100)n−1)\text{Compound Interest}=P\times \left((1+\frac{r}{100})^n-1\right)Compound Interest=P×((1+100r)n−1)
Where:
- P=25,000P=25,000P=25,000 (principal)
- r=12%r=12%r=12% (annual interest rate)
- n=3n=3n=3 years
Step-by-step calculation:
- Calculate (1+12100)3=(1.12)3=1.404928(1+\frac{12}{100})^3=(1.12)^3=1.404928(1+10012)3=(1.12)3=1.404928
- Multiply by principal: 25,000×1.404928=35,123.2025,000\times 1.404928=35,123.2025,000×1.404928=35,123.20 (total amount after 3 years)
- Subtract principal to find compound interest:
35,123.20−25,000=10,123.2035,123.20-25,000=10,123.2035,123.20−25,000=10,123.20
Final compound interest = Rs. 10,123.20 after 3 years at 12% per annum compounded annually
