Find the compound interest on ₹5,000 at a rate of 6% per annum for 3 years, compounded annually (correct to the nearest integer).

Correct option is A

Given:

Principal P = ₹5000

Rate R = 6% per annum

Time T = 3 years

Interest is compounded annually

Formula Used:
Compound Interest is calculated using the formula:

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

Where A is the amount after T years.
Compound Interest CI = A - P

Solution:

A =$$5000 \left(1 + \frac{6}{100} \right)^3 = 5000 \times (1.06)^3$$​

A =$$5000 \times 1.191016 = 5955.08$$​

CI = 5955.08 – 5000 = ₹955.08 ≈ ₹955 (nearest integer)

Alternate Method:

Rate R = 6% = $$\frac6{100}$$ = $$\frac 3{50}$$ 

=$$\frac {5000}{125000}\times23877$$

= 955.08 ≈ ₹955 (nearest integer)