GIVEN: Principal = Rs. 10000, Rate = 40% per annum CONCEPT: Compound interest earned on 3rd year = Amount received after 3 years – Amount received after 2 years. FORMULA USED: In case of compound interest: Amount = P×(1+
R
100
)T Where, P = Principal, R = rate of interest and T = Time And CI = Amount – Principal CALCULATION: Applying the formula: Amount received after 2 years = 10000×(1+
40
100
)2=Rs.19600 And Amount received after 3 years = 10000×(1+
40
100
)3=Rs.27440 ∴ Interest for the 3rd year = 27440–19600=Rs.7840