If in 2 years at simple interest the principal increases by 18%, what will be the compound interest (in Rs) earned on Rs 7000 in 3 years at the same rate?
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Case 1: Simple Interest
Let the principal amount be P
Time = 2 years
Rate = R%
SI = 18 % of P = 18P/100
Formula for SI = PRT/100
18P/100 = P*2*R
R = 9 %
Case 2 : Compound Interest
Amount = Rs 7000
Rate = 9%
Time = 3 years
Amount = P(1+R/100)^T
CI = P((1+R/100)^T -1)
CI = 7000(1+9/100)^3 -1)
CI = 7000(1.295-1)
CI = 7000*0.295
CI = Rs 2065
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