Marie invested Rs 80,000 in a business. She would be paid interest at 5% per annum compounded annually. Find (i) the amount standing on her credit in the second year. (ii) the interest for the third year.

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(i) Rs 98820; (ii) Rs 4410

(i) Rs 8820; (ii) Rs 441

(i) Rs 88200; (ii) Rs 4410

None of these

answer is C.

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Detailed Solution

Concept- By using the given formula i.e.
A=P[1+𝑟/100]𝑡
where, A= amount P = principal amount r = rate of interest t = time
Step 1- Putting all the values in the above formula to get the amount standing on her credit in the second year, we get;
A=80000[1+5/100]2
A=80000 ×21/20 ×21/20
A= 88200
Step 2- Now, for the interest of the third year;
The total amount of the third year,
(A) = P[1+𝑟/100]𝑡
A = 80000[1+5/100]3
A = 80000× 21/20×21/20×21/20
A = 92610
Now, we will subtract the amount of two years from the amount of three years to get the third year's interest,
Third-year interest = 92610 – 88200
= 4410
The amount standing on her credit in the second year is Rs 88200, and the interest for the third year is Rs 4410.
Hence, the correct answer is option 3) 88200, 4410

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