Maria invested Rs 8000 in a business. She would be paid interest 5% per annum compounded annually. Find

• (i) The amount credited against her name at the end of the second year.
• (ii) The interest for the third year.

To calculate the amount credited to Maria's investment and the interest for the third year, we can use the formula for compound interest.

Calculating the Total Amount After Two Years

The formula for compound interest is:

A = P (1 + r/n)^(nt)

Where:

• A = the amount of money accumulated after n years, including interest.
• P = the principal amount (initial investment).
• r = annual interest rate (decimal).
• n = number of times that interest is compounded per year.
• t = the number of years the money is invested for.

For Maria:

• P = Rs 8000
• r = 5% = 0.05
• n = 1 (compounded annually)
• t = 2 years

Substituting these values into the formula:

A = 8000 (1 + 0.05/1)^(1*2) = 8000 (1 + 0.05)^2 = 8000 (1.05)^2

A = 8000 * 1.1025 = Rs 8820

Amount Credited After Two Years

The total amount credited against Maria's name at the end of the second year is Rs 8820.

Finding the Interest for the Third Year

To find the interest for the third year, we first calculate the amount at the end of the third year:

A = 8000 (1 + 0.05)^3 = 8000 * (1.157625) = Rs 9261

The interest earned during the third year is the difference between the amount at the end of the third year and the amount at the end of the second year:

Interest for the third year = Amount at end of third year - Amount at end of second year

Interest = 9261 - 8820 = Rs 441

Interest for the Third Year

The interest earned by Maria for the third year is Rs 441.