Question

The difference between the compound interest and simple interest on a sum of money for 1.5years at 12%per annum is ₹150.calculate the amount

Answer 1

Answer:

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Step-by-step explanation:

Basics first.

   We know there is NO difference between simple interest and compound interest for 1st year if CI is compounded annually.

   CI attracts interest on interest on all subsequent years.

Now to the solution :

The difference of 150 is solely due to interest on interest in the second year. This represents 12% simple interest on interest received for first year for 6 months (or 6% in effect).

Therefore, interest for the first year is :

150/6 x 100 = 2500

Now, 2500 must be 12% of the principal amount at the beginning of first year.

Therefore, principal at the beginning of first year is :

P = 2500/12 x 100 = 20833.33

{(150/6 x 100)/12} x 100 = 20833.33