The simple interest on a sum of money for 2 years at 8% is Rs. 1200.What will be the compound interest on that
sum at the same rate and for the same period? /
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The simple interest formula is :
Principle × rate × time
P × 0.08 × 2 = 1200
0.16 P = 1200
P = 1200/0.16
P = 7500
Compound interest accumulation factor.
P (1 + i)ⁿ = Accumulated amount
P = 7500
i = 8%
n = 2
7500 × (1.08)² = 8748
Rs 8748
Interest = Accumulated amount - principle
= 8748 - 7500 = 1248
Rs 1248
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