Question

Simple interest on a sum of money for 2 years at 4% is ₹450. Find compound interest of the same sum and at the same rate for 2 years.

Answer 1

Given: SI = Rs. 450; R = 4%; T = 2 years

Now,

P = (SI x 100)/(R x T)

= (450 x 100)/(4 x 2)

= ₹5,625

Now, P = ₹5,625, R = 4% and T = 2 years

So, the amount is calculated as

A = 5625(1 + 4/100)²

= 5625(26/25) ²

= 3802500/625

= ₹6084

Hence,

CI = A - P

= 6084 - 5625

= ₹459