The compound interest on Z 10000 at 10% per annum for 3 years, compounded annually, is
Present value, P = Rs.10000
Interest rate, R = 8% per annum
Time, n = 3 years
∴ Amount (A) = P (1 + R/100)n [Where, P = Present value
R = Annual interest rate
n = Time in years]
∴ A = 10000 (1 + 10/100)3
⇒ A = 10000 (1 + 1/10)3
⇒ A = 10000 (11/10)3
⇒ A = 10000 × 11/10 × 11/10 × 11/10
⇒ A = 10 × 11 × 11 × 11
⇒ A = 13310
∴ Amount = Rs.13310
∴ Compound interest = Rs.(13310 – 10000) [∵CI = A – P]
= Rs.3310