Question

If, in the two years, at a simple interest, the principal increases by 10%,what will be the compound interest earned on 1000 rupees for 2 years at the same rate of interest

Answer 1

let the principal is 100

amount increases by 10% so simple Interest=

$\frac{100 \times r \times 2}{100} = 10\%of100 \\ 2r = \frac{10}{100} \times 100 \\ 2r = 10 \\ r = 5$

now compound interest,

$= (100 {( \frac{100 + 5 }{100} )}^{2} - 1) \\ = (100 {(1.05)}^{2} - 1)\\ = 100(1.1025 - 1) \\ = 100 \times 0.1025 \\ = 10.25$

hope it helps you