A sum of Rs. 25000 was given as loan on compound interest for 3 years compounded annually at 5% per annum during the first year, 6% per annum during the second year and 8% per annum during the third year. The compound interest is

Sum, P = 25000


Interest rate for 1st year, p = 5%


Interest rate for 2nd year, q = 6%


Interest rate for 3rd year, r = 8%


Time, n = 3 years


Now,


Amount (A) = P × (1 + p/100) × (1 + q/100) × (1 + r/100)


= 25000 × (1 + 5/100) × (1 + 6/100) × (1 + 8/100)


= 25000 × (1 + 1/20) × (1 + 3/50) × (1 + 2/25)


= 25000 × 21/20 × 53/50 × 27/25


= 250 × 21/2 × 53/5 × 27/25


= 10 × 21/2 × 53/5 × 27


= 1 × 21 × 53 × 27


= 30051


∴ Compound interest = Rs.(30051 – 25000) [∵CI = A – P]


= Rs.50051

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