What is the compound interest on a sum of ₹25,000 after three years at a rate of 12\% per annum interest compounded yearly?

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Accepted Answer

**Solution:**

1. Use the compound interest formula:
   $$ A = P \left( 1 + \frac{r}{100} ight)^n $$

2. Substitute the given values:
   - Principal, $P = 25000$
   - Rate, $r = 12\%$
   - Time, $n = 3$ years

$$ A = 25000 	imes (1 + \frac{12}{100})^3 = 25000 	imes (1.12)^3 $$

3. Calculate $(1.12)^3$:
   $$ (1.12)^3 = 1.404928 $$

4. Calculate the total amount:
   $$ A = 25000 	imes 1.404928 = 35123.20 $$

5. Calculate the compound interest:
   $$ CI = A - P = 35123.20 - 25000 = 10123.20 $$

**Answer:** The compound interest is ₹10,123.20.

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