Rekha borrowed Rs. 40,000 for 3 years at 10% per annum compound interest. Calculate the interest paid by her for the second year.

Answer

To calculate the interest paid by Rekha for the second year on her loan of Rs. 40,000 at a compound interest rate of 10% per annum, we will follow these steps:

### Step 1: Calculate the Amount at the End of the First Year
We will use the formula for compound interest to find the amount at the end of the first year:
\[ A = P \left(1 + \frac{r}{100}\right)^n \]
Where:
- \(P = 40,000\) (the principal amount)
- \(r = 10\%\) (the rate of interest)
- \(n = 1\) (the time in years)

Substituting the values:
\[ A = 40,000 \left(1 + \frac{10}{100}\right)^1 \]
\[ A = 40,000 \left(1 + 0.1\right)^1 \]
\[ A = 40,000 \times 1.1 \]
\[ A = 44,000 \]

### Step 2: Identify the Principal for the Second Year
The amount at the end of the first year (Rs. 44,000) will be the principal for the second year.

### Step 3: Calculate the Interest for the Second Year
Now we will calculate the interest for the second year using the same formula for compound interest, but this time using the new principal:
\[ P = 44,000 \]
\[ r = 10\% \]
\[ n = 1 \]

Using the simple interest formula (which is the same as compound interest for one year):
\[ I = P \times \frac{r}{100} \times t \]
Substituting the values:
\[ I = 44,000 \times \frac{10}{100} \times 1 \]
\[ I = 44,000 \times 0.1 \]
\[ I = 4,400 \]

### Final Answer:
The interest paid by Rekha for the second year is **Rs. 4,400**.

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