Question
Download Solution PDFThe simple interest on a sum of ₹ 1,000 for 2 years at 5% p.a. is invested at compound interest for 4 years at the same interest rate. What is the compound interest on the simple interest?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFGiven:
Sum = Rs. 1000
Rate = 5%
Time = 2 years
Concept:/Formula:
SI = P × r × t/100
A = P (1 + r/100)t
P = Principal, r = rate and t = time
Calculation:
SI = (1000 × 2 × 5)/100
⇒ SI = 100
According to the question,
A = 100 (1 + 5/100)4
⇒ A = 100 × 21/20 × 21/20 × 21/20 × 21/20
⇒ A = 121.55
⇒ CI = 121.55 – 100 = 21.55
∴ required compound interest = Rs. 21.55
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