An amount of ₹20,000 is invested at an annual interest rate of 10%, compounded annually. What will be the compound interest earned after 3 years?

Correct option is A

Given:

Principal (P) = ₹20,000

Rate (R) = 10% per annum

Time (T) = 3 years

Compounding = annually

We need to find Compound Interest (CI)

Formula Used:

A = P $$\times \left(1 + \frac{R}{100}\right)^T$$​

CI = A - P

Solution:

Amount (A)

A = $$20000 \times \left(1 + \frac{10}{100}\right)^3$$​

= 20000$$\times (1.1)^3 = 20000 \times 1.331 = 26620$$​

Compound Interest

CI = A - P = 26620 - 20000 = 6620

The compound interest earned after 3 years = ₹6620