Question
Suresh invested Rs. 12,000 at simple interest of 5% p.a. If he kept withdrawing Rs. 2,000 after every one year, then find the total interest earned by Suresh at the end of three years.
[Consider that the interest is payable at the end of three years, only]
Solution
Simple interest = Sum × rate of interest × time period ÷ 100
So, interest earned in the first year
= 12000 × 5 × 1 ÷ 100 = Rs. 600
And interest earned in the second year
= (12000 − 2000) × 5 × 1 ÷ 100 = Rs. 500
And interest earned in the third year
= (12000 − 4000) × 5 × 1 ÷ 100 = Rs. 400
So, total interest earned = 600 + 500 + 400 = Rs. 1,500
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