The simple interest on a sum of money for 2 years at 8% per annum is Rs 640. What will be the compound interest on the same sum at the same rate for the same period, compounded annually? 

Asked by alphin.jacob | 6th Jan, 2016, 06:27: PM

Expert Answer:

begin mathsize 14px style Let space Rs. space straight x space be space the space principal. number space of space years space equals space 2 space years rate space of space interest space equals 8 percent sign interest space equals Rs.640 Simple space interest equals fraction numerator straight p cross times straight n cross times straight r over denominator 100 end fraction 640 equals fraction numerator straight x cross times 2 cross times 8 over denominator 100 end fraction straight x equals Rs space 4000 Principal space is space Rs space 4000.   Compound space interest equals straight P open parentheses 1 plus straight R over 100 close parentheses to the power of straight t minus straight P rightwards double arrow Compound space interest equals 4000 open parentheses 1 plus 8 over 100 close parentheses squared minus 4000 rightwards double arrow Compound space interest equals Rs. space 665.6  end style
the compound interest on the same sum at the same rate for the same period, compounded annually is Rs. 665.6

Answered by Vijaykumar Wani | 7th Jan, 2016, 11:12: AM