Money Interest Problem

Question

Jake has loaned 20000 pesos from the bank with an interest of 10% every year. If Jake completes the payment within 3 years, what amount should be paid to the bank?

Could someone explain to me the entire solution?

Answer 1

After the first year, the amount is $20,000 + 20,000*0.1 = 22,000$

After the second year, the amount is $22,000 + 22,000*0.1 = 24,200$

After the third year, the amount is $24,200 + 24,200*0.1 = 26,620$ (exact answer)

However, for small interest percentages, usually the linear approximation (used by The Dead Legend) is taken. I would say $10$ per cent is not very small, and so the difference here is already pretty much. In general, the simple formula would be $$ 20,000 \times \left(1+\frac{10}{100}\right)^3 = 26,620 $$

Answer 2

Amount= $Principal+Interest$

(assumption, Interest is calculated at initial principal, i.e. simple interest)
$Interest$=$Principal\times Rate\times years$ =$20,000\times0.1\times 3$
Total money= $20,000+6,000$