Question

A certain sum of money, invested for 5 years at 8% p.a. simple interest, earns an interest of Rs. 12000. Find:
(i) the sum of money
(ii) the compound interest earned by this money in two years and at 10% p.a. compound interest.

Answer 1

Rate(R)=8% p.a.
Period(T)= 5 years
Interest(T)=Rs. 12000
(i) $\therefore$ Sum =$\frac{I\times 100}{R\times T}$
$=Rs.\frac{12000\times 100}{8\times 5}=Rs.30000$
(ii) Rate(R)=10% p.a.
Time(T)= 2 years
Principal(P)=Rs. 30000
Interest for the first year= $\frac{PTR}{100}$
=$Rs.\frac{30000\times 10\times 1}{100}=Rs.3000$
$\therefore$ Amount after one year=Rs. 30000+3000
=Rs. 33000
Principal for the second year= Rs. 33000
Interest for the second year= $\frac{33000\times 10\times 1}{100}$
=Rs. 3300
$\therefore$ Compound Interest for two years
=Rs. 3000 +3300 =Rs.6300