Anil borrowed a sum of Rs 9600 to install a handpump in his dairy. If the rate of interest is  5.5%  per annum compounded annually, determine the compound interest which anil will have to pay after 3 years.

Explanation

Principal `(p) =` Rs `9600`
Rate `(r) = 5 ½ % = 11/2 %`
Time `= 3`years
By using the formula,
`A = P (1 + R/100)^n`
`= 9600 (1 + 11/2×100)^3`
`= 9600 (211/200)^3`
`= Rs 11272.71`
∴ Compound Interest `= A – P =` Rs `11272.71 –` Rs `9600 =` Rs `1672.71`