What will Rs.1500 amount to in three years if it is invested in 20% p.a.…

Concept: Compound interest grows the principal by a fixed percentage each period, and each new period's interest is calculated on the previous period's already-grown amount. The amount after T years at rate R% p.a., compounded annually, is A = P(1 + R/100)T.

Application:

1. Identify the values: Principal P = Rs. 1500, Rate R = 20% p.a., Time T = 3 years.

2. Substitute into A = P(1 + R/100)T to get A = 1500 × (1 + 20/100)3 = 1500 × (1.2)3.

3. Compute the growth factor: 1.2 × 1.2 = 1.44, and 1.44 × 1.2 = 1.728.

4. Multiply: A = 1500 × 1.728 = Rs. 2592.

Cross-check: Compute year by year on the running balance — Year 1: 1500 + 20% of 1500 = 1800; Year 2: 1800 + 20% of 1800 = 2160; Year 3: 2160 + 20% of 2160 = 2592. This matches the formula result, confirming Rs. 2592 is correct.