What is the compound interest on ₹7,000 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: ₹7,000 → ₹7,700. Year 2: ₹7,700 → ₹8,470. Year 3: ₹8,470 → ₹9,317. Compound interest = ₹9,317 − ₹7,000 = ₹2,317, which is 33.1% of the principal. Simple interest for 3 years would be only 30%, ₹2,100.