If ₹5000 is invested for a period of three years at 20% compound interest per annum, compounded annually, what will be the amount received after 3 years?
A. ₹8640
B. ₹8680
C. ₹8000
D. ₹8480
Sol:
Principle (P) = Rs. 5000
Rate of interest (R) = 20% per annum
Time period (T) = 3 years
Formula used:
Amount = P (1 + R/100)T.
Calculation:
Amount = 5000(1 + 20/100)3
⇒ 5000 (1 + 1/5)3
⇒ 5000 × (6/5)3
⇒ 5000 × 216/125
⇒ 40 × 216 = Rs. 8640.
∴ The amount received after 3 years will be Rs. 8640.
