What is the compound interest on Rs. 25,000 for 3 years at 12% p.a. compounded annually?

Problem restatement
Compute CI for 3 years at 12% on Rs. 25,000.

Given data

• P = Rs. 25,000; r = 12% p.a.; t = 3 years

Concept/Approach
Amount A = P(1 + r)^t; CI = A − P.

Step-by-step calculation
A = 25,000 × (1.12)³ = 25,000 × 1.404928 = 35,123.20CI = 35,123.20 − 25,000 = Rs. 10,123.20

Verification/Alternative
Year-wise interest: 3,000; then 3,360; then 3,763.20 ⇒ total 10,123.20.

Common pitfalls
Adding 12% thrice to principal (simple interest) underestimates the final amount; compounding is required.