Mr Sharma wants to choose a investment plan

1. 15% for 5 years(SI)

2. 20% for 3 years(CI)

Which plan will result in higher amount?

My doubt is while doing the calculation for CI I got 1.728 then why are we subtracting it with 1 in order to find which will result in higher amount?

It is because 1 is the principal. Whenever we calculate compound interest, what we get is the Total amount which is equal to Principal + Interest Earned. So, 1.2x1.2x1.2=1.728 is the compounded value, earned when we originally start from Rs.1. what interest is earned is 0.728 Always, remember to check if you need TA or Interest for C.I.

1st will be higher