Question

A certain sum of money invested for 5 years at 8% p.a. simple interest earns an interest of ₹ 12,000. Find:
(i) the sum of money.
(ii) the compound interest earned by this money in two years and at 10% p.a. compound interest.

Answer 1

Rate (R) = 8% p.a.

Period (T) = 5 years

Interest (I) = ₹12000

(i) ∴ Sum = `("I"xx100)/("R"xx"T")`

`=₹(12000xx100)/(8xx5)`

= ₹30000

(ii) Rate (R) = 10% p.a.

Time (T) = 2 years

Principal (P) = ₹30000

Interest for the first year = `"PRT"/100`

`=₹(30000xx10xx1)/100`

= ₹3000

∴ Amount after one year = ₹30000 + 3000

= ₹33000

Principal for the second year = ₹33000

Interest for the second year =`(33000xx10xx1)/100`

= ₹3300

∴ Compound Interest for two years

= ₹3000 + 3300

= ₹6300