Question

If the compound interest on a certain sum for three years at 5% be Rs. 50.44,
what would be the simple interest ?​

Answer 1

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Answer 2

Concept:

Compound interest is the interest that is charged to the principal as well as the previous year's interest.

Given:

We have,

Time = 3 years,

Rate = 5%,

Compound interest = Rs. 50.44

Find:

We are asked to find what would be the simple interest.

Solution:

We have,

Time = 3 years,

Rate = 5%,

Compound interest = Rs. 50.44

We know that,

Compound interest = Amount − Principal

So,

Amount = Compound interest + Principal

And,

Amount = P(1+ (R/100))ⁿ

So,

Compound interest + Principal = P(1+ (R/100))ⁿ

i.e.

50.44 + P = P(1+ (5/100))³

We get,

50.44 + P = P(21/20)³

i.e.

50.44 + P = P(9261/8000)

i.e.

403520 + 8000P = 9261P

So,

9261P - 8000P = 403520,

⇒

1261P = 403520,

So,

P = Rs. 320

Now,

Using the formula of simple interest,

i.e.

S.I. = (PRT)/100

so,

S.I. = (320 × 5 × 3)/100

On solving,

We get,

S.I. = Rs. 48

Hence, the simple interest. is Rs. 48

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