The difference between the compound interest and the simple interest on Rs42000 for two
years is Rs105 at the same rate of interest per annum. Find
(i) the rate of interest
(ii) the compound interest earned in second year.
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Answer:
P = Rs 42000 T=2 years
Let rate = r %
S.I=
100
PRT
=
100
42000×r×2
=840 Rs
For C.I
A=P(1+
100
r
)
n
=42000(1+
100
r
)
2
=42000(1+
10000
r
2
+
50
r
)
=42000+
10
42r
2
+840r
C.I = A - P
=42000+
10
42r
2
+840r−42000
=
10
42r
2
+840r
Given C.I−S.I=105
=
10
42r
2
+840r−840r=105
=
10
42r
2
=105
=42r
2
=1050
=r
2
=25
r=5%
C.I at 2nd year = 42000(1+
100
5
)
2
−42000
=42000(1.1025−1)=4305 Rs
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