Answer:
The compound interest is Rs8275
Step-by-step explanation:
The rule of the compound interest is A = P[tex](1+\frac{r}{n})^{nr}[/tex], where
- r is the interest rate in decimal
- n is the number of periods
The interest I = A - P
∵ The amount of investment is Rs25000 for 3 years
∴ P = 25000
∴ t = 3
∵ The rate of interest is 10% per annum, compounded annually
∴ r = 10% = 10 ÷ 100 = 0.1
∴ n = 1 ⇒ compounded annually
→ Substitute these value in the 1st rule above to find the new amount
∵ A = 25000[tex](1+\frac{0.1}{1})^{1(3)}[/tex]
∴ A = 25000[tex](1.1)^{3}[/tex]
∴ A = Rs33275
→ Use the 2nd rule above to find the interest
∵ I = 33275 - 25000
∴ I = 8275
∴ The compound interest is Rs8275
