Q.1) The simple interest on a sum of money for 2 years at 12% per annum is ₹ 1380.
Find:
(i) the sum of money.
(ii) the compound interest on this sum for one year payable half-yearly at the same rate.
Solution:
It is given that
Simple Interest (SI) = ₹ 1380
Rate of interest (R) = 12% p.a.
Period (T) = 2 years
(i) We know that
Sum (P) = (SI × 100)/ (R × T)
Substituting the values
= (1380 × 100)/ (12 × 2)
= ₹ 5750
(ii) Here
Principal (P) = ₹ 5750
Rate of interest (R) = 12% p.a. or 6% half-yearly
Period (n) = 1 year – 2 half years
So we get
Amount (A) = P (1 + R/100)n
Substituting the values
= 5750 (1 + 6/100)2
By further calculation
= 5750 × (53/50)2
So we get
= 5750 × 53/50 × 53/50
= ₹ 6460.70
Here
Compound Interest = A – P
Substituting the values
= 6460.70 – 5750
= ₹ 710.70
Q.2) A man invests ₹ 5000 for three years at a certain rate of interest, compounded annually.
At the end of one year it amounts to ₹ 5600. Calculate:
(i) the rate of interest per annum
(ii) the interest accrued in the second year.
(iii) the amount at the end of the third year.
Solution:
It is given that
Principal = ₹ 5000
Consider r% p.a. as the rate of interest
(i) We know that
At the end of one year
Interest = Prt/100
Substituting the values
= (5000 × r × 1)/ 100
= 50r
Here
Amount = 5000 + 50r
We can write it as
5000 + 50r = 5600
By further calculation
50r = 5600 – 5000 = 600
So we get
r = 600/50 = 12
Hence, the rate of interest is 12% p.a.
(ii) We know that
Interest for the second year = (5600 × 12 × 1)/ 100
= ₹ 672
So the amount at the end of the second year = 5600 + 672
= ₹ 6272
(iii) We know that
Interest for the third year = (6272 × 12 × 1)/ 100
= ₹ 752.64
So the amount after the third year = 6272 + 752.64
= ₹ 7024.64
Q.3) A man borrows ₹ 6000 at 5% compound interest. If he repays ₹ 1200 at the end of each
year, find the amount outstanding at the beginning of the third year.
Solution:
It is given that
Principal = ₹ 6000
Rate of interest = 5% p.a.
We know that
Interest for the first year = Prt/100
Substituting the values
= (6000 × 5 × 1)/ 100
= ₹ 300
So the amount after one year = 6000 + 300 = ₹ 6300
Principal for the second year = ₹ 6300
Amount paid = ₹ 1200
So the balance = 6300 – 1200 = ₹ 5100
Here
Interest for the second year = (5100 × 5 × 1)/ 100 = ₹ 255
Amount for the second year = 5100 + 255 = ₹ 5355
Amount paid = ₹ 1200
So the balance = 5355 – 1200 = ₹ 4155
Q.4) A sum compounded annually becomes 25/16 time of itself in two years. Determine the
rate of interest per annum.
Solution:
Consider sum (P) = x
Amount (A) = 25/16x
Period (n) = 2 years
We know that
A/P = (1 + r/100)n
Substituting the values
25x/16x = (1 + r/100)2
By further calculation
(1 + r/100)2 = (5/4)2
So we get
1 + r/100 = 5/4
r/100 = 5/4 – 1/1 = 1/4
By cross multiplication
r = 100 × ¼ = 25
Hence, the rate of interest is 25% p.a.
Q.5) Find the difference between the simple interest and compound interest on ₹ 2500 for 2
years at 4% per annum, compound interest being reckoned semi-annually.
Solution:
It is given that
Principal (P) = ₹ 2500
Rate of interest (r) = 4% p.a. or 2% half-yearly
Period (n) = 2 years or 4 half-years
We know that
SI = Prt/100
Substituting the values
= (2500 × 4 × 2)/100
= ₹ 200
If compounded semi-annually
A = P (1 + r/100)n
Substituting the values
= 2500 (1 + 2/100)4
By further calculation
= 2500 × 51/50 × 51/50 × 51/50 × 51/50
= ₹ 2706.08
We know that
CI = A – P
Substituting the values
= 2706.08 – 2500
= ₹ 206.08
So the difference between CI and SI = 206.08 – 200 = ₹ 6.08
Q.6) A sum of money is invested at compound interest payable annually. The interest in two
successive years is ₹ 225 and ₹ 240. Find:
(i) the rate of interest
(ii) the original sum
(iii) the interest earned in the third year.
Solution:
It is given that
Interest for the first year = ₹ 225
Interest for the second year = ₹ 240
So the difference = 240 – 225 = ₹ 15
Here ₹ 15 is the interest on ₹ 225 for 1 year
(i) Rate = (SI × 100)/ (P × t)
Substituting the values
= (15 × 100)/ (225 × 1)
So we get
= 20/3
= 6 2/3% p.a.
(ii) We know that
Sum = (SI × 100)/ (R × t)
Substituting the values
= (225 × 100)/ (20/3 × 1)
It can be written as
= (225 × 100 × 3)/ (20 × 1)
So we get
= 225 × 15
= ₹ 3375
(iii) Here
Amount after second year = 225 + 240 + 3375 = ₹ 3840
So the interest for the third year = Prt/100
Substituting the values
= (3840 × 20 × 1)/ (100 × 3)
= ₹ 256