Question

On a certain sum, the compound interest in 3 years at 5% per annum is ₹ 1261. Find the sum.

Answer 1

Given:

• Compound Interest (C.I.) = ₹ 1261
• Time (T) = 3 years
• Rate of interest (R) = 5% per annum
• Find the Principal (P)

Step-wise calculation:

1. Compound interest formula:

`A = P(1 + R/100)^T`

2. Amount (A) is principal plus compound interest:

A = P + C.I.

A = P + 1261

3. Substitute values in the compound interest formula:

`P(1 + 5/100)^3 = P + 1261`

4. Calculate:

`(1 + 5/100)^3 = (1.05)^3`

`(1 + 5/100)^3 = 1.157625`

5. Substitute and simplify:

P × 1.157625 = P + 1261

1.157625P – P = 1261

0.157625P = 1261

`P = 1261/0.157625 ≈ 8000`