₹ 8,000 were invested at 5% per annum C.I compounded annually. Find :

(i) the amount at the end of the second year.

(ii) the interest for the third year.

(i) For the first year :

P = ₹ 8,000, R = 5 %, T = 1 year

$\text{Interest for first year} = \dfrac{P \times R \times T}{100}\\[1em] = \dfrac{8,000 \times 5 \times 1}{100}\\[1em] = \dfrac{40,000}{100}\\[1em] = ₹ 400$

Amount at the end of first year = P + I

= ₹ 8,000 + 400

= ₹ 8,400

For the second year :

P = ₹ 8,400, R = 5 %, T = 1 year

$\text{Interest for second year} = \dfrac{P \times R \times T}{100}\\[1em] = \dfrac{8,400 \times 5 \times 1}{100}\\[1em] = \dfrac{42,000}{100}\\[1em] = ₹ 420$

Amount at the end of second year = P + I

= ₹ 8,400 + 420

= ₹ 8,820

Hence, the amount at the end of the second year = ₹ 8,820.

(ii) For the third year :

P = ₹ 8,820, R = 5 %, T = 1 year

$\text{Interest for third year} = \dfrac{P \times R \times T}{100}\\[1em] = \dfrac{8,820 \times 5 \times 1}{100}\\[1em] = \dfrac{44,100}{100}\\[1em] = ₹ 441$

Hence, the interest for the third year = ₹ 441.