Question 67

The simple interest accrued on an amount of Rs. 22,500 at the end of four years is Rs.10,800. What would be the compound interest accrued on the same amount at the same rate of interest at the end of two years?

Solution
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Let the rate of interest be r
Simple Interest = $$\frac{P t r}{100}$$
           
10800 = $$\frac{22500}{100}$$ x 4 x r

r = $$\frac{10800}{22500}$$ x $$\frac{100}{4}$$ = 12%

Compound Interest = 22500(1 + $$\frac{12}{100}$$)2 - 22500
                             = 22500 x $$\frac{112}{100}$$ x $$\frac{112}{100}$$ - 22500
                             = 28224 - 22500
                             = 5724

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