Rekha borrowed ₹ 40,000 for 3 years at 10% per annum compound interest. Calculate the interest paid by her for the second year.

For 1st year:

P = ₹ 40,000

R = 10%

T = 1 year

$\text{Interest} = \Big(\dfrac{P \times R \times T}{100}\Big)\\[1em] = ₹ \Big(\dfrac{40,000 \times 10 \times 1}{100}\Big)\\[1em] = ₹ \dfrac{4,00,000}{100}\\[1em] = ₹ 4,000$

And

$\text{Amount = P + Interest}\\[1em] = ₹ 40,000 + 4,000\\[1em] = ₹ 44,000$

For 2nd year:

P = ₹ 44,000

R = 10%

T = 1 year

$\text{Interest} = \Big(\dfrac{P \times R \times T}{100}\Big)\\[1em] = ₹ \Big(\dfrac{44,000 \times 10 \times 1}{100}\Big)\\[1em] = ₹ \dfrac{4,40,000}{100}\\[1em] = ₹ 4,400$

Hence, compound interest = ₹ 4,400.