Question

simple interest on a certain sum of money for 4yrs at 4%per annum exceeds the ci on the same sum for 3 years at 5% p. a. by 228.find the sum

Answer 1

Let us take a simpler case of 5% interest for TWO years.

In two years, SI will be 10%

What happens to CI after two years ?

It is 5% + (5% + 5% on 5%) = 10.25%

These two % figures are Effective Rates of Interest.

Similarly, in three years, SI is 15% and CI will be 15.7625%

The difference between these two is (15.7625 - 15)% = 0.7625%

Now, 15.25 is 0.7625% of what ?

0.7625% x P = 15.25

=> P = 2000