Question

By using the formula, find the amount and compound interest on:

The simple interest on a sum of money for $2$ years at $8\%$ per annum is $Rs.2400.$ What will be the compound interest on that sum at the same rate and for the same period?

Answer 1

Simple interest $(S.I)=Rs.2400$

Rate $\left(R\right)=8\%$ p.a.

Period $\left(T\right)=2$ years

$S.I=\frac{P\times R\times T}{100}$

$\therefore$ Sum $\left(P\right)=\frac{S.I.\times 100}{R\times T}$

$=\frac{2400\times 100}{8\times 2}=Rs.15000$

$\therefore$ The Amount is given by the formula

$A=P{(1+\frac{R}{100})}^T$

$=15000{(1+\frac{8}{100})}^2$

$=15000{(1+\frac{2}{25})}^2$

$=Rs.15000\times {\left(\frac{27}{25}\right)}^2$

$=Rs.15000\times \frac{27}{25}\times \frac{27}{25}$

$=Rs.17496$

$\therefore$ $C.I=A-P=17496-15000$

$=Rs.2496$