Question

Shikha deposited ₹2000 in a bank which pays 6% simple interest. She withdrew ₹ 700 at the end of the first year . What will be her balance after 3 years?

My solution :
P₁ = ₹2000 R=6% T=1yr
SI =( 2000*6*1)÷100
SI = (120)

P₂ = ₹2000-₹700 = ₹1300
SI = (1300*6*2)÷100
SI = 156

Amt = 1300+156+120
Amt = ₹1576

Other solution
P₁ = ₹2000 R=6% T=1yr
SI =( 2000*6*1)÷100
SI = (120)
Amt = 2000 + 120 =₹2120
P_{2 =} 2120-700=1420
SI = (1420*6*2)÷100
SI = 170.4

Amt = 1420+170.4=1590.4

I am not able to understand why do we have to subtract ₹700 from initial amount ₹2000 . Shikha withdrew ₹700 at the end of the first year .

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Answer 1

Second solution is correct

Initially shikha has ₹2000

Interest rate =6%

After one year she will get interest

SI =( 2000*6*1)÷100
SI = (120)

So total money shikha has after 1 year =2000+SI=2120

After 1 year , amount withdrawn = Rs 700

Principal amount left (P1) = Rs 2120 – Rs 700 = Rs 1420

Now

Time period (T) = 2 years

Rate of interest (R) = 6% p.a.

Interest after 2 years = (P×R×T/100)

= (1420×6×2100) = Rs 170.40

Total amount after 3 years = Rs 1420 + Rs 170.40 = Rs 1590.40