Multiple choice

Maria invested Rs. 8000 in a business. She would be paid interest at 5% per annum compounded annually. Find t he interest for the third year.

  1. Rs.441

  2. Rs.542

  3. Rs.356

  4. Rs.440
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A Correct answer
Explanation

Interest during the third year is calculated on the balance after two years. That balance is 8000 x 1.05^2, so the third-year interest is 8000 x 1.05^2 x 0.05 = Rs. 441.

AI explanation

To find the interest for the third year, we first calculate the amount at the end of the second year, which is 8000 * (1 + 5/100)^2 = 8000 * 1.1025 = Rs. 8820. The interest for the third year is then 5% of this accumulated amount. Thus, the interest is 8820 * 0.05 = Rs. 441.

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