Question 185

The difference between the coin pound interest and simple interest accrued on an amount at the end of three years at the rate of 12% is 381.888. What is the amount ?

Solution

Let the amount be a

let the rate of interest = r =0.12 (given)

compound interest =$$ a(1+r)^{3} $$ -a

= $$a(r^{3}+3r(1+r))$$

simple interest = 3ar

difference = $$a(r^{3}+3r(1+r)) -3ar$$

= $$a(r^{3}+3r^{2})$$ = 381.88 (given)

a = 381.88/$$(r^{3}+3r^{2})$$

= 8500 (by substituting r =0.12)

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