Find the amount and the compound interest on Rs. 15625 for 3 years at 12% per annum, compounded annually.
Present value = Rs.15625
Interest rate = 12% per annum
Time = 3 years
Amount (A) = P (1 + R/100)n [Where, P = Present value
R = Annual interest rate
n = Time in years]
∴ A = 15625 (1 + 12/100)3
⇒ A = 15625 (112/100)3
⇒ A = 15625 (28/25)3
⇒ A = 15625 × 21952/15625
⇒ A = 21952
∴ Amount = Rs.21952
∴ Compound interest = Rs.(21952 – 15625)
= Rs.6327