Rajan deposited 10000 rupees in a bank, which gives 6% simple interest. Write and equation connecting the number of years of deposit and the total interest. Is the total interest proportional to the number of years? What if interest is compounded?

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Solution

Amount deposited by Rajan, P = Rs.10000

Rate of interest, R = 6%

Let the total interest be Rs s and the number of years be n.

We know that simple interest =

This is the equation relating the number of years of deposit and the total interest.

The above equation is of the form y = kx, where k is the constant of proportionality.

Here, k = 600

Thus, the total interest is proportional to the number of years of deposit.

If the interest is compounded then the amount can be calculated as:

Compound Interest = Amount − Principal

The above equation is not of the form y = kx, where k is the constant of proportionality.

Thus, the compound interest is not proportional to the number of years of deposit.

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