Question

Find the ratio of compound interest to simple interest on a sum at 8 per annum for 3 years

Answer 1

Answer:

1.082

Step-by-step explanation:

In the question,

The Simple interest, SI is given by,

$=\frac{PRT}{100}$

where,

P = Principle Amount

R = Rate of interest

T = Time period

Here,

R = 8%

T = 3 years

So,

$SI = \frac{PRT}{100}=\frac{P\times 8 \times3}{100}  =\frac{24P}{100}$

Now,

The Compound Interest, CI is given by,

$CI=P(1+\frac{R}{100} )^{T}-P=P(1+\frac{8}{100} )^{3}-P =P(1.259712-1)\\ CI=0.259712P$

So,

Ratio of Compound Interest to Simple Interest is,

$\frac{CI}{SI}=\frac{0.259712 P}{0.24P}= 1.082$

Therefore, the ratio of Compound Interest to Simple Interest is 1.082