A man lends ₹ 12500 at 12% for the first year, at 15% for the second year and at 18% for the third year. If the rates of interest are compounded yearly; find the difference between the C.I. of the first year and the compound interest for the third year.

For first year :

P = ₹ 12500

R = 12%

T = 1 year

I = $\dfrac{P \times R \times T}{100} = \dfrac{12500 \times 12 \times 1}{100}$ = ₹ 1500.

Amount = ₹ 12500 + ₹ 1500 = ₹ 14000

For second year :

P = ₹ 14000

R = 15%

T = 1 year

I = $\dfrac{P \times R \times T}{100} = \dfrac{14000 \times 15 \times 1}{100}$ = ₹ 2100

Amount = ₹ 14000 + ₹ 2100 = ₹ 16100

For third year :

P = ₹ 16100

R = 18%

T = 1 year

I = $\dfrac{P \times R \times T}{100} = \dfrac{16100 \times 18 \times 1}{100}$ = ₹ 2898.

Difference between interest of first year and third year = ₹ 2898 - ₹ 1500 = ₹ 1398.

Hence, difference between interest of first year and third year = ₹ 1398.