Find the compound interest at the rate of 5% for three years on that principal which in three years at the rate of 5% per annum given Rs 12000 as simple interest.

Explanation

"For simple interest :
`R=5%`
`T=3 `years
`SI=Rs.1200`

Now,
`SI=(PRT)/100`
`P=(SItimes100)/RT`
`P= (1200times100)/(5times3)`
`P=Rs.8,000`
For compound interest:
`R=5%`
`n=3` years
`P=Rs.8000`
`A=P(1+R/100)^n`
`A=8000(1+5/100)^3`
`A=8000(1.05)^3`
`A=9261`
Now,
`CI=A−P`
`CI=Rs. 9261−Rs. 8000=Rs. 1261`
`therefore` The compound interest `Rs. 1261`.