1.find the difference between simple interest and compound interest on rupees to 2500 for 2 years at 4% per annum compound interest reckoned semi annually.
2.Find the sum which amounts to Rs. 9261 at 10℅ p.a. compound interest for 18months , interest payable half yearly . plz help me and plz give me answer fast.
2.Find the sum which amounts to Rs. 9261 at 10℅ p.a. compound interest for 18months , interest payable half yearly . plz help me and plz give me answer fast.
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Interest is the extra money paid by
institutions like banks or post offices on
money deposited (kept) with them.
Interest is also paid by people when
they borrow money.
With Simple interest , the interest is
calculated on the same amount of
money in each time period, and,
therefore, the interest earned in each
time period is the same. i.e., If the
interest on a sum borrowed for certain
period is reckoned uniformly, then it is
called simple interest.
Let the principal = P, Rate = R% per
annum (p.a) and Time = T years. Then ,
Example - 1
A sum of Rs 10,000 is borrowed at a
rate of interest 15% per annum for 2
years. Find the simple interest on this
sum and the amount to be paid at the
end of 2 years.
Solution :
On Rs 100, interest charged for 1 year is
Rs 15.
So, on Rs 10,000, interest charged
=
Interest for 2 years =
Amount to be paid at the end of 2 years
= Principal + Interest
Compound Interest
Compound interest is calculated on the
principal plus the interest for the
previous period. The principal amount
increases with every time period, as the
interest payable is added to the
principal. This means interest is not
only earned on the principal, but also on
the interest of the previous time
periods.
Therefore, the compound interest
calculated is more than the simple
interest on the same amount of money
deposited.
Let us take an example and find the
interest year by year. Each year our
sum or principal changes.
Calculating Compound Interest
Example - 2
A sum of Rs 20,000 is borrowed by
Heena for 2 years at an interest of 8%
compounded annually. Find the
Compound Interest (C.I.) and the
amount she has to pay at the end of 2
years.
Aslam asked the teacher whether this
means that they should find the interest
year by year. The teacher said ‘yes’, and
asked him to use the following steps :
1. Find the Simple Interest (S.I.) for one
year.
Let the principal for the first year be P 1 .
Here, P 1 = Rs 20,000
SI 1 = SI at 8% p.a. for 1st year = Rs
2. Then find the amount which will be
paid or received. This becomes principal
for the next year.
Amount at the end of 1st year = P1 +
SI 1 = Rs 20000 + Rs 1600
= Rs 21600 = P 2 (Principal for 2nd
year)
3. Again find the interest on this sum
for another year.
SI 2 = SI at 8% p.a.for 2nd year = Rs
= Rs 1728
rate = 4 %
time = 2 years
as the c.i is reckoned semi annually 1/2
rate will be 2 % and time will be 1 years
therefore c.i = p ( 1 + r /100 )^n
= 2500 ( 1 + 2/100 )^1
=2500 ( 100 + 2/100)
= 2500 ( 102/100)
= 2500(51/50)
=255