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,
$\mathrm{CI}=\mathrm{A}-\mathrm{P}$
$=\mathrm{Rs} 11,272.72-\mathrm{Rs} 9,600$
$=\mathrm{Rs} 1,672.72$