The simple interest on a sum of money for 2 years at 12% per annum is 1380

The simple interest on a sum of money for 2 years at 12percent per annum is 1380

The simple interest on a sum of money for 2 years at 12percent per annum is 1380

The simple interest on a sum of money for 2 years at 12% per annum is 1380. Find:

(i) the sum of money.

(ii) the compound interest on this sum for one year payable half-yearly at the same rate.

Solution:

Principal (P) = ₹ 5750

Rate of interest (R) = 12% p.a. or 6% half-yearly

Period (n) = 1 year – 2 half years

Amount (A) = P (1 + R/100)n

= 5750 (1 + 6/100)2

= 5750 × (53/50)2

= 5750 × 53/50 × 53/50

= ₹ 6460.70

Compound Interest = A – P

= 6460.70 – 5750

= ₹ 710.70

see also: Maths

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