Question

If the compound interest on a sum for 2 years at 12.5% per annum is Rs 510, what is the simple interest on the same sum at the same rate for the same period of time?

Answer 1

Answer:

The simple interest on a sum of Rs. 1920 for 2 years at 12.5% per annum is Rs. 480.

Step-by-step explanation:

Let the principle amount be P.

It is given that the compound interest on a sum for 2 years at 12.5% per annum is Rs 510.

$I=P(1+r)^t-P$

Where, P is principle amount , r is rate of interest and t is time in year.

$510=P(1+0.125)^2-P$

$510=P[(1.125)^2-1)]$

$510=0.265625P$

$P=1920$

Therefore the principle amount is 1920.

The simple interest on the same sum at the same rate for the same period of time is

$I=\frac{P\times r\times t}{100}$

$I=\frac{1920\times 12.5\times 2}{100}=480$

Therefore the simple interest on a sum of Rs. 1920 for 2 years at 12.5% per annum is Rs. 480.