Question 122

Simple interest on a certain sum at 7 p.c.p.a for four years is Rs. 3584. What will be the compound interest on the same principal at 4 p.c.p.a. in two years ?

Solution

Let the principal amount be P and given that R = 7%/ annum and T = 4 years, S.I for 4 years = Rs 3584

S.I. = $$\frac{P \times R \times T}{100}$$ = $$\frac{P \times 7 \times 4}{100}$$ = 3584

P = Rs 12800

Now , to calculate the C.I rate of interest has been changed to 4%/ annum and time period to 2 years

C.I. = P$$(1 + \frac{4}{100})^2$$ - P

= 12800(1.0816-1)

= 12800 x 0.0816

= Rs. 1044.48

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