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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.
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Solution
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
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