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Question

The interest charged on the certain sum is Rs. 720 for one year and Rs. 1,497.60 for two years. Find, whether the interest is simple or compound. Also, calculate the rate per cent and the sum.

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Solution

Interest for 1 year=Rs.720
Interest for 2 years=Rs.1497.60
Interest for 2nd year=1497.60720=Rs.777.60
As the interst is not same for two years, it is compund interest not simple interest.

Difference between C.I of two successive years=777.60720=Rs.57.60
Rate of interest=57.60×100720×1=8%

Let the sum be Rs.100
Interest on it for 1st year=8% of 100=8100×100=Rs.8
If the interest for one year is Rs 8 then sum=Rs.100
If the interest for one year is 720 then sum=1008×720=Rs.9000



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