# What Will be The Interest?

If the first year’s interest on a certain sum of money placed at 5% per annum compound interest is Rs.1200, What will be the interest for the 3rd year?

1. Rs. 1220
2. Rs. 1323
3. Rs. 1423
4. Rs. 1330

Monis Rasool Professor Asked on 28th July 2015 in

Explanation:-
Let the principal be Rs.X.
Given-
Rate = 5 %, Compound Interest = Rs.1200, time = 1 year.
Formula-
Simple Interest = P x R x T/100
Where, P = principal , R = rate, & T = time.
Then, 1200 = X x 5 x 1/100
1200 = X/20
X = 1200 x 20
X = Rs.24000
The principal is Rs.24000
Then, the amount of first year  = 2400 + 1200
= Rs.25200
Principal for second year = Amount of first year
Then. the Compound Interest of second year
= 25200 x 5 x 1/100
= 252 x 5
= Rs.1260
The amount of second year = 25200 + 1260
= Rs.26460
The amount of second year = the principal of third year
Then, the compound interest of third year = 26460 x 5 x 1/100
= RS.1323
Hence the answer is (2) Rs.1323.

Anurag Mishra Professor Answered on 2nd August 2015.