Question 127

The compound interest (compounded annually) on a certain sum of money @ 20 p.c:p.a for 2 years is Rs. 5,632. What is the simple interest on the same sum of money @ 12 p.c:p.a for 3 years?

Solution

$$C.I. = P [(1 + \frac{R}{100})^T - 1]$$

=> $$5632 = P [(1 + \frac{20}{100})^2 - 1]$$

=> $$5632 = P [(\frac{6}{5})^2 - 1]$$

=> $$5632 = \frac{11 P}{25}$$

=> $$P = \frac{5632 \times 25}{11} = 12,800$$

$$\therefore$$ $$S.I. = \frac{12800 \times 12 \times 3}{100}$$

= $$128 \times 36$$ = Rs. $$4,608$$

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