Question

The difference between compound interest and simple interest on a sum of money for 3 years at 5% p.a. is rs 61. find the sum . how to solve

Answer 1

Simple interest = PNR/100

N = 3 and R = 5

Hence simple interest = 15P/100 = 3P/10=0.15P

Compound interest = P(1+R/100)^n-P where

N = 3 and R = 5 here

Compound interest = P(1.05)^3-P = 0.157625P

Given that the difference between the compound interest and simple interest on a certain sum of money at 5% per annum for 3 years is rupees to 61

i.e. 0.157625P-0.15P = 0.0225P = 61

P = 61/0.007625 = 8000

Sum =8000 rupees