Question

The simple interest on a sum of money for 2 years at 8% per annum is ₹ 2400. What will be the compound interest on that sum at the rate and for the same period?

Answer 1

Given:

Simple interest= ₹ 2400

Interest rate= 8% per annum

Time=2 years

Simple interest (SI) = PTR/100

Where P is principle amount, T is time taken, R is rate per annum

2400 = (P × 2× 8)/ 100

On rearranging we get,

P = 2400 × 25/4

= ₹ 15000

∴ the sum is ₹ 15000.

To find the amount we have the formula,

Amount (A) = P (1+(R/100))ⁿ

Where P is present value, r is rate of interest, n is time in years.

Now substituting the values in above formula we get,

∴ A = 15000 (1 + 8/100)²

⇒ A = 15000 (108/100)²

⇒ A = 600 (27/25)²

⇒ A = 24 (27) (27)

⇒ A = ₹ 17496

∴ Compound interest = A – P

= 17496 – 15000 = ₹ 2496