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The Interests on Two Successive Years for a Sum Invested at Compound Interest Compounded Annually Are Rs 840 and Rs 940.80. Calculate the Rate of Interest and the Sum Invested.

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Question

The interests on two successive years for a sum invested at compound interest compounded annually are Rs 840 and Rs 940.80. Calculate the rate of interest and the sum invested.

Sum
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Solution

For the seoond year:

A=Rs 940.80 ; P=Rs 840 ; n= 1 ;  r = ?

`"A" = "P" (1 + "r"/100)^"n"`

940.80 = 840 `(1 + "r"/100)^1`

94080 = 84000 +840 r

840 r = 10080

r = 12

Hence, rate of interest = 12°/o 

For the first year: 

I= Rs 840 ; r = 12 % ; n = l ; P = ?

`"I" =("P" xx "r" xx "n")/100`

Rs 840 = Rs `("P" xx 12 xx 1)/100` 

P = Rs`84000/12`

P = Rs 7000

The sum invested= Rs 7,000 

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