Question
Download Solution PDFThe simple interest on a certain sum at 6% per annum for three years is ₹ 1,200. Then, the compound interest on the same sum at the same rate for two years will be:
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFGiven:
Simple interest (SI) = ₹ 1,200
Rate (R) = 6% per annum
Time (T) = 3 years
Formula Used:
Simple Interest (SI) = (P × R × T) / 100
Compound Interest (CI) = P (1 + R/100)n - P
Calculation:
To find the principal (P):
Simple Interest (SI) = (P × R × T) / 100
₹ 1,200 = (P × 6 × 3) / 100
₹ 1,200 = (18P) / 100
P = (₹ 1,200 × 100) / 18
P = ₹ 6,666.67
Now, to find the compound interest (CI) for 2 years:
CI = P (1 + R/100)n - P
CI = ₹ 6,666.67 (1 + 6/100)2 - ₹ 6,666.67
CI = ₹ 6,666.67 (1 + 0.06)2 - ₹ 6,666.67
CI = ₹ 6,666.67 (1.06)2 - ₹ 6,666.67
CI = ₹ 6,666.67 × 1.1236 - ₹ 6,666.67
CI = ₹ 7,490.670 - ₹ 6,666.67
CI = ₹ 824
The compound interest on the same sum at the same rate for two years is approximately ₹ 824.
Last updated on May 29, 2025
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