Question

A man lends 12,500 at 12% for the first

Answer 1

Answer: $1398

Step-by-step explanation:

Given , Principal (P) =  $12,500

Rate of interest for 1st year $(R_1)$=  12% =0.12

Rate of interest for 2nd year $(R_2)$=  15% =0.15

Rate of interest for 3rd year $(R_3)$=  18% =0.18

Interest for first year = $I=P\times R_1\times T$

= $12500\times 0.12\times 1$

= $1500

Now, For second year new principal $P_2 = \ 12,500+\ 1,500 =\ 14,000$

Interest for second year = $I=P_2\times R_2\times T$

= $14000\times 0.15\times 1$

= $2100

Now, For third year new principal $P_3 = \ 14000+\ 2,100 =\ 16,100$

Interest for third year = $I=P_3\times R_3\times T$

= $16100\times 0.18\times 1$

= $2898

Difference  between the compound interest of the first year and the  compound interest for the third year. = $2898 - $1500 = $1398

Hence, the difference  between the compound interest of the first year and the  compound interest for the third year is $1398 .