Anil borrowed a sum of Rs 9600 to install a handpump in his dairy.

Question:

Anil borrowed a sum of Rs 9600 to install a handpump in his dairy. If the rate of interest is $5 \frac{1}{2} \%$ per annum compounded annually, determine the compound interest which Anil will have to pay after 3 years.

Solution:

$\mathrm{A}=\mathrm{P}\left(1+\frac{\mathrm{R}}{100}\right)^{\mathrm{n}}$

$=9,600\left(1+\frac{5.5}{100}\right)^{3}$

$=9,600(1.055)^{3}$

$=\mathrm{Rs} 11,272.72$

Now,

$\mathrm{CI}=\mathrm{A}-\mathrm{P}$

$=\mathrm{Rs} 11,272.72-\mathrm{Rs} 9,600$

$=\mathrm{Rs} 1,672.72$

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