Question 169

Simple interest on a sum of money for 4 yr at 7 pcpa is Rs.3584. What would be the compound interest (compounded annually) on the same amount of money for 2 yr at 4 pcpa?

Solution

Simple interest on an amount of P with rate R for the time T will be = $$\frac{PRT}{100}$$

So 3584 = $$\frac{P \times 7 \times 4}{100}$$

P = 12800

Hence, compound interest will be = $$12800(1 + 4/100)^{2} - 12800 $$ = 13844.48 - 12800 = 1044.48

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