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Find the Sum Invested at 12 ~ 0/O P.A. Compound Interest on Which the Interest for the Third Year Exceeds that of the First Year by Rs 531.25

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Question

Find the sum invested at `12  1/2` p.a. compound interest on which the interest for the third year exceeds that of the first year by Rs 531.25.

Sum
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Solution

Let the sum be P

Interest for first year: 

`"P" (1 + 25/(2 xx 100)) - "P"` ..................(i)

Interest for third year: 

`"P" (1 + 25/(2 xx 100))^3 - "P" (1 + 25/(2 xx 100))^2`  .........(ii)

Subtracting (ii) from (i) 

`"P" (1 + 25/(2 xx 100))^3 - "P" (1 + 25/(2 xx 100))^2 - "P" (1 + 25/(2 xx 100)) + "P"` = Rs 531.25

Rs 531. 25 = 1. 423828 P - 1. 265625 P - 1. 125 P + P

Rs 531. 25 = 0. 033203 P

P = Rs 16,000 

Hence the sum is Rs 16,000 

shaalaa.com
Concept of Compound Interest - Compound Interest as a Repeated Simple Interest Computation with a Growing Principal
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