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Question
Find the compound interest at the rate of 5% for three years on that principal which in three years at the rate of 5% per annum gives Rs 12000 as simple interest.
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Solution
\[P = \frac{SI \times 100}{RT}\]
According to the given values, we have:
\[ = \frac{12, 000 \times 100}{5 \times 3}\]
= 80, 000
The principal is to be compounded annually.
So,
\[ A = P \left( 1 + \frac{R}{100} \right)^n \]
\[ = 80, 000 \left( 1 + \frac{5}{100} \right)^3 \]
\[ = 80, 000 \left( 1 . 05 \right)^3 \]
\[ = 92, 610\]
Now,
CI = A - P
= 92, 610 - 80, 000
= 12, 610
Thus, the required compound interest is Rs 12, 610.
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