What is the compound interest on ₹8,000 for 3 years at 10% per year, compounded annually?

💡 Solution & Explanation

Each year adds 10% of the amount at the start of that year. Year 1: ₹8,000 → ₹8,800. Year 2: ₹8,800 → ₹9,680. Year 3: ₹9,680 → ₹10,648. Compound interest = ₹10,648 − ₹8,000 = ₹2,648, which is 33.1% of the principal. Simple interest for 3 years would be only 30%, ₹2,400.