SOLUTION!!

The concept of compound interest (CI) has to be used here. The principal, rate of interest and time is given in the question. According to the question, we have to find the compound interest and the amount.

We can do it with formula and without the formula.

Let's do it with the formula first.

Principal (P) = Rs 50,000

Rate of interest (R) = 10%

Time (n) = 3 years

Amount = P(1 + (R/100))ⁿ

Amount = 50000(1 + (10/100))³

Amount = 50000(110/100)³

Amount = 50000(11/10)³

Amount = 50000 × (1331/1000)

Amount = 50 × 1331

Amount = Rs 66,550

CI = Amount - Principal

CI = Rs 66,550 - Rs 50,000

CI = Rs 16,550

Now, let's do it without using the formula.

First year:-

Principal (P) = Rs 50,000

Rate of interest (R) = 10%

Time (T) = 1 year

SI = (P × R × T)/100

SI = (50,000 × 10 × 1)/100

SI = 500 × 10

SI = Rs 5000

Amount = Principal + SI

Amount = Rs 50,000 + Rs 5000

Amount = Rs 55,000

Second year:-

The amount in the first year becomes principal in the second year.

Principal (P) = Rs 55,000

Rate of interest (R) = 10%

Time (T) = 1 year

SI = (P × R × T)/100

SI = (55,000 × 10 × 1)/100

SI = 550 × 10 × 1

SI = Rs 5500

Amount = Principal + SI

Amount = Rs 55,000 + Rs 5500

Amount = Rs 60,500

Third year:-

The amount in the second year becomes the principal in the third year.

Principal (P) = Rs 60,500

Rate of interest (R) = 10%

Time (T) = 1 year

SI = (P × R × T)/100

SI = (60,500 × 10 × 1)/100

SI = 605 × 10 × 1

SI = Rs 6050

Amount = Principal + SI

Amount = Rs 60,500 + Rs 6050

Amount = Rs 66,550

CI = Amount - Principal

CI = Rs 66,550 - Rs 50,000

CI = Rs 16,550

Abbreviations used:-

P → Principal

R → Rate of interest

T or n → Time

SI → SIMPLE interest

CI → Compound interest