Question
The difference between the compound interest, compounded
annually and simple interest on Rs. ‘P’ at the rate of 30% p.a. for 2 years, is Rs. 180. If Rs. (P + 1000) is invested at the same rate p.a., then find the compound interest, compounded annually earned after 3 years.Solution
Using formula Difference = Sum(R/100)2 Or, 180 = P(30/100)2 Or, 180 = P(900/10000) Or, 0.0900P = 180 Or, P = 2000 Sum that is invested on compound interest = 2000 + 1000 = Rs. 3000 Compound interest = 3000(1 + 30/100)3 – 3000 = 3000 × (13/10) × (13/10) × (13/10) – 3000 = 6591 – 3000 = Rs. 3591
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