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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.

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Solution

Rate(R)=8% p.a.
Period(T)= 5 years
Interest(T)=Rs. 12000
(i) Sum =I×100R×T
=Rs.12000×1008×5=Rs.30000
(ii) Rate(R)=10% p.a.
Time(T)= 2 years
Principal(P)=Rs. 30000
Interest for the first year= PTR100
=Rs.30000×10×1100=Rs.3000
Amount after one year=Rs. 30000+3000
=Rs. 33000
Principal for the second year= Rs. 33000
Interest for the second year= 33000×10×1100
=Rs. 3300
Compound Interest for two years
=Rs. 3000 +3300 =Rs.6300

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