Simple interest on a sum of money for 2 years at

Question:

Simple interest on a sum of money for 2 years at $6 \frac{1}{2} \%$ per annum is Rs 5200 . What will be the compound interest on the sum at the same rate for the same period?

Solution:

P=\frac{S I \times 100}{R T}

$\therefore P=\frac{5,200 \times 100}{6.5 \times 2}$

= 40,000

Now,

$\mathrm{A}=\mathrm{P}\left(1+\frac{\mathrm{R}}{100}\right)^{\mathrm{n}}$

$=40,000\left(1+\frac{6.5}{100}\right)^{2}$

$=40,000(1.065)^{2}$

$=45,369$

Also,

$\mathrm{CI}=\mathrm{A}-\mathrm{P}$

$=45,369-40,000$

$=5,369$

Thus, the required compound interest is Rs 5,369 .

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