Compound Interest
Compound Interest
Related to compound amount
Q. The compound amount of a sum of money in 2 years is Rs. 121000 and in 3 years is Rs. 13310. Find out the sum and the rate of interest per annum.
Solution :
Case 1:
Time (T)= 2 years
C.A.1 = Rs. 12100
Principle (P)= ? Rate (R)=?
We know that,
C.A. 1 = C.A.1 = P (1+ R/100) T1
12100= P (1+ R/100) 2 ......(i)
Case 2:
Time (T) = 3 years
C.A. 2 = Rs. 13310
Principle (P) = ? Rate (R) = ?
We know that,
C.A.2 = P (1+ R/100) T2
13310 = P (1+ R/100) 3 .......(ii)
Dividing eqn (ii) by eqn (iP (1+ R/100) ), we get,
13310/12100= [P(1+ R/100)3]/ P(1+ R/100)2
or, 1.1 = 1 + R/100
or, 1.1= 1+ 0.01R
or, 1.1-1 = 0.01R
or, 0.1/0.01 = R
or, R= 10%
Therefore, the rate of interest is 10%.
Substituting value of R in eqn(i), we get,
12100= P(1+10/100) 2
or, 12100 = P (1.1) 2
or, P = Rs. 1000
Therefore, the required principle is Rs.1000.