2

PROFIT, LOSS, DISCOUNT, COMMISSION

AND BROKERAGE
Unit Structure :

2.1 Profit and Loss

2.2 Exercises
2.3 Discount
2.4 Trade discount and cash discount
2.5 Exercises
2.6 Commission and brokerage
2.7 Exercises

2.1 PROFIT AND LOSS

Traders, shopkeepers earn by selling goods generally. Traders earn by

buying and selling goods. The price at which an item is purchased is called
its cost price (CP). The price at which an item is sold is called its Net
Selling Price (NSP).

If the Net Selling Price is greater than cost price, then a profit is earned. If
the selling price is less than the cost price, then a loss is incurred. When
the selling price is equal to cost price then neither profit nor loss is made.
This is called a Break even point.
Profit = NSP - CP it NSP > CP
Loss = CP - NSP if NSP < CP
Profit percentage (loss percentage) is calculated when profits (or loss) is
compared with the cost price.

Profit
Profit % = ×100
CP

Loss
Loss % = ×100
CP

CP
This gives profit =  Profit% ×
100

Now, since, NSP = CP + Profit

19
 CP
Hence, NSP = CP +  Profit% ×
100

 Profit% 
NSP =  1+ ×CP
 100 

 100 + Profit% 
NSP =  ×CP
 100 

Similarly we can show that,

 100 - Loss% 
NSP =  ×CP
 100 

 100 + Profit% 
NSP =  ×CP when profit is earned
 100 

 100 - Loss% 
NSP =  ×CP when loss is incurred
 100 

Solved Examples : (Profit and Loss)

1) Ms. Divya bought a property per Rs. 14,00,000 and sold it for
Rs. 14,72,000. Find her percentage profit or loss.

Solution :
Cost Price = 14,00,000

Selling price = 14,72,000

Since selling price > cost price, profit is earned

Profit = Selling price - Cost Price
= 14,72,000 - 14,00,000
= 72,000
Profit
% Profit = ×100
CP
72,000
= ×100 = 5.14
14, 00, 000

2) Mr. Harish bought a wardrobe for Rs. 4,50,000 and sold it for
Rs. 4,36,000. Find his percentage gain or loss.

20
Solution :

Cost Price = 4,50,000

Selling Price = 4,36,000

Since cost price > selling price, Loss is incurred

Loss = Cost Price - Selling Price

= 4,50,000 - 4,36,000
= 14,000

Loss
Loss % = ×100
CP
14,000
= ×100
4,50, 000
= 3.11

3) An article is bought for Rs. 4,800 and sold at 15% profit. What was the
selling price?

Solution :
Selling price = ?
Cost price = 4,800, Profit % = 15
 100 + Profit % 
Selling price = Cost Price  
 100 
 100 +15 
 4800  
 100 
 115 
 4800  
 100 
 5520

4) An article was bought for Rs. 7,000 and sold at 2% loss. Find its
selling price.

Solution :
Cost Price = 7,000, Loss % = 2
 100 -Loss % 
Selling Price = Cost Price  
 100 

21
  100 - 2 
 7000  
 100 
 98 
 7000  
 100 
 6860

5) Printer was sold at Rs. 8,980 at a 5% loss. Find its cost Price.

Solution :
Selling Price = 8,980, Loss % = 5
 100 -Loss % 
Selling Price = Cost Price  
 100 
 100 -5 
8,980 = Cost Price  
 100 
8,980 = Cost Price (0.95)
8,980
 Cost Price =  9, 452.63
0.95

6) Mr. Tushar earned a profit at 25% on cost by selling an article for

Rs. 6,140. What would have been the percentage profit or loss if he
had to sold the article for Rs. 7,040?

Solution :
Selling Price = 6,140, Profit % = 25
 100 + Profit % 
Selling Price = Cost Price  
 100 
 100  25 
6,140 = Cost Price  
 100 
6,140 = Cost Price (1.25)
6,140
 Cost Price =  4,912
1.25

Now Cost Price = 4,912, and selling price = 7,040 then profit % or
Loss % = ?

Since selling price > cost price, profit is earned

Profit = Selling Price - Cost Price
= 7,040 - 4,912
= 2,128
Profit 2,128
% Profit =  100  100  43.32
CP 4,912

22
7) Mr. Vinay made a 7% loss by selling the article for Rs. 13,625. What
would have been his percentage loss or gain if he had sold it for
Rs. 15,250?

Solution :
Selling Price = 13,625, Loss % = 7, CP = ?

 100 -Loss % 
Selling Price = Cost Price  
 100 
 100 -7 
13,625 = Cost Price  
 100 
 93 
13,625 = Cost Price  
 100 
13, 625
 Cost Price =  14, 650.54
0.93

Selling Price = 15,250 and cost price = 14,650.54.

Since selling price > cost price, Profit is earned

Profit = Selling Price - Cost Price

= 15,250 - 14,650.54
= 599.46

Profit 599.46
% Profit =  100   100  4.09
CP 14, 650.54

8) A shopkeeper brought two tables at Rs. 8,800 each. He sold one table
at 10% profit and the other at 10% loss. Find his total percentage gain
or loss.

Solution :
For the first table, selling price =?
 100 + Profit % 
Selling price = Cost Price  
 100 
 100 +10 
 8,800  
 100 
= 9,680

For Second table, Selling Price =?

 100 -Loss% 
Selling price = Cost Price  
 100 
 100 - 10 
 8,800  
 100 
= 7,920

23
 Total Cost Price = 8,800 + 8,800 = 17,600

Total Selling Price = 9,680 + 7,920 = 17,600

Total Cost Price = Total Selling Price

 No Profit No Loss

9) A person sold two tables for Rs. 990 each and thus earned 10% profit
on one and incurred a 10% loss on the other. If both tables are
considered together, find his percentage profit or loss.

Solution :
Total selling price = 990 + 990 = 1980

For first table, CP = ?

 100 + Profit % 
Selling Price = Cost Price  
 100 
 100 +10 
990  Cost Price  
 100 
990 = Cost price (1.1)
990
 Cost Price   900
101

For Second table, CP = ?

 100 -Loss % 
Selling Price = Cost Price  
 100 
 100 - 10 
990  Cost Price  
 100 
990
 Cost Price   1100
0.9

Total Cost Price = 900 + 1100 = 2000

Total Selling Price = 990 + 990 = 1980

Since Total Selling Price < Total Cost Price, Loss is incurred.

Loss = Total Cost Price - Total Selling Price

= 2000 - 1980
= 20

Loss
Loss %   100
Total Cost Price
20
 100  1
2000

24
10) When sold at a profit of 6% an article gives Rs. 715 more than when it
is sold at a loss of 5%. Find its cost price?

Solution :

Let Cost Price = Rs. x

If the article is sold at 6% profit, then

 100 + Profit % 
Selling Price = Cost Price  
 100 
 100 + 6 
 x 
 100 
 1.06 x

If the article is sold at 5% loss, then

 100 - Profit % 
Selling Price = Cost Price  
 100 
 100 - 5 
 x 
 100 
 0.95 x

The difference  1.06 x  0.95 x  0.11x

But it given as 715.
0.11x  715
715
x  6500
0.11
 Cost Price = 6500

2.2 EXERCISES

1) Ms. Sheena bought a property for Rs. 12,00,000 and sold it for
Rs. 12,72,000. Find her percentage profit or loss.
2) Mr. Madhukar bought a sofa set for Rs. 3,50,000 and sold it for
Rs. 3,36,000. Find his percentage profit or loss.
3) A Lamp shade was bought for Rs. 2,800 and sold at 15% profit, what
was the selling price?
4) A cupboard was sold for Rs. 7,906 at 18% profit, what was the cost
price?
5) An article was bought for Rs. 5,000 and sold at 5% loss. Find its
selling price.
6) A printer was sold at Rs. 7,980 at 5% loss. Find its cost price.
7) By selling an article at Rs. 3,000, a person earned 20% profits. What
would have been the percentage profit or loss is he has sold it at
Rs. 2,750?
25
8) A person earned 12% profit by selling an article at Rs. 4,144. What
would have been the selling price if he had sold it at 16% profit?
9) By selling an article at Rs. 24,288, a loss of 8% on cost was incurred.
Had the article been sold at 8% profit, what would have been the
selling price?
10) A shopkeeper bought 2 chairs at Rs. 4,400 each. He sold one chair at
10% profit and the other at 10% loss. Find his total percentage gain or
loss.
11) When sold at a profit of 6%, an article fetches Rs. 715 more than when
it is sold at a loss of 5%. Find its cost price.

Answers :
1) 6% Profit 2) 4% loss 3) Rs. 3,220 4) Rs. 6,700 5) Rs. 4,900
6) Rs. 8,400 7) 10% Profit 8) Rs. 4,292 9) Rs. 28,512
10) No Profit No Loss 11) Rs. 6,500

2.3 DISCOUNT

In the market each good / item for sale has a marked price or printed price.
The prices of all goods forms a list or catalogue, hence this rice is also
called as the List Price or listed price or catalogue price.

LP  List Price

In order to attract customers, the seller (manufacturer or trader) offers a

reduction in the list price. This reduction is called as Discount. After
deducting the discount, an item is sold at the Net Selling Price (NSP).
Thus,

NSP = LP - Discount

Usually discount is expressed as a percentage on the list price.

2.4 TRADE DISCOUNT AND CASH DISCOUNT

When a trader is selling goods to another trader (e.g. wholesaler to

retailer) usually a two discounts structure is followed.

First at all, trade discount (TD) is given to all traders. T.D. is a percentage
on the List price. List price minus the Trade Discount is called Invoice
Price (IP) or reduced List Price.

If an item is purchased for immediate cash payment then an extra discount

which is called as cash discount is offered. It is calculated against the
invoice price.

26
 Thus,
Trade discount = x% at List Price.
Invoice Price = List Price - Trade Discount
Cash discount = 9% at Invoice Price.
Net Selling Price = Invoice Price - Cash discount
Profit = NSP - CP
Profit
Profit %   100
CP
Loss = CP - NSP
Loss
Loss %  100
CP

Solved Examples : (Discount)

1) After giving a 15% discount on the list price, a pant is sold for
Rs. 1,500, find the list price.

Solution :

Trade discount = 15% (on list price)

Net selling price = 1500
Let List Price = Rs. x
Trade discount = 15% of x = 0.15x
No Cash discount is given,
 Net Selling Price = Invoice Price
Invoice Price = Net Selling Price = List Price - Trade discount
1500 = x - 0.15x
1500 = 0.85x
1500
x  1764.71
0.85

2) A trader bought an article for Rs. 4000 and listed it for Rs. 9000. He
gave 10% discount on the list price. What was the his profit
percentage?

Solution :
Cost price = 4000
List Price = 9000
Trade discount = 10%
Invoice Price = List Price - Trade discount
= 9000 - 10% at 9000
= 9000 - 900
= 8100

27
 No cash discount is given
 Invoice Price = Net Selling Price

Net Selling Price = 8100

Profit = Net Selling Price - Cost Price

= 8100 - 4000
= 4100

Profit
Profit %   100
CP
4100
 100
4000
 102.5

3) A trader purchased a cupboard and listed it two times his purchase

price and then allowed 50% discount on the list price. Find the profit
percentage.

Solution :
Let Cost Price = Rs. 100
 List Price = 200
Trade discount = 50% on LP
Invoice Price = List Price - Trade discount
= 200 - 50% of 200
= 200 - 100
= 100

Cash discount is not given  Invoice Price = Net Selling Price

Net Selling Price = 100

Profit = Net Selling Price - Cost Price

= 100 - 100
=0

4) A trader purchased an item for Rs. 4000. After giving 20% discount on
the list price, he made 44% Profit on his cost. Find the list price.

Solution :
Cost Price = 4000
Trade discount = 20% on List Price
Let List Price = Rs. x
Invoice Price = List Price - Trade discount
= x - 20% of x
= 0.8x
Profit % = 44
28
 Net Selling Price = Invoice Price
 100 + Profit % 
Net Selling Price = Cost Price  
 100 
 100 + 44 
0.8x = 4000  
 100 
0.8x = 4000 (1.44)
0.8x = 5760
5760
x  7200
0.8
 List Price = `7200

5) A trader gave 30% discount on List Price and made 50% profit on his
cost. If his list price was Rs. 7200, find his cost price.

Solution :
Trade discount = 30%
Profit % = 50
List Price = 7200
Invoice Price = List Price - Trade discount
= 7200 - 30% of 7200
Invoice Price = 7200 - 2160 = 5040
Net Selling Price = Invoice Price
 100 + Profit % 
Net Selling Price = Cost Price  
 100 
 100 + 50 
5040 = Cost Price  
 100 
5040 = Cost Price (1.5)
5040
Cost Price   3360
1.5

6) After giving a 20% discount, a pen was sold for Rs. 608 and 45%
profit on cost was made. Find the list price and the cost price.

Solution :
Trade discount = 20%
Net Selling Price - 608
Profit % = 45
Let List Price = Rs. x
Invoice Price = List Price - Trade discount
= x - 20% of x
= 0.8x
Net Selling Price = Invoice Price
29
  Net Selling Price = 0.8x
 0.8x = 608
608
x  760
0.8
 List Price = Rs. 760

 100 + Profit % 
Net Selling Price = Cost Price  
 100 
 100 + 45 
608 = Cost Price  
 100 
608
Cost Price   419.31
1.45

7) A trader gave 20% discount on list price and a further 2% cash

discount on the invoice price. If the list price was Rs. 3000 then find
net selling price.

Solution :
List Price = 3000
Trade discount = 20% on List Price
Invoice Price = List Price - Trade discount
= 3000 - 20% of 3000
= 3000 - 600
= 2900
Cash discount is given on Invoice Price =
1
2% of 2400 = 2   2400  48
100
Net Selling Price = Invoice Price - Cash discount
= 2400 - 48
= 2352

8) A trader gave 15% trade discount and further 1% cash discount for
cash payment and sold article for Rs. 50000. Find the List Price.

Solution :
Let List Price = x
Invoice Price = List Price - Trade discount
= x - 15% of x
= 0.85x
Cash discount = 1% of Invoice Price
Net Selling Price = Invoice Price - Cash discount
= 0.85x - 1% of 0.85x
= 0.85x - 0.0085x

30
  Net Selling Price = 0.8415x
But Net Selling Price = 50000
 50000 = 0.8415x
50000
x  59417.71
0.8415
 List Price = Rs. 59417.71

9) Shopkeeper purchased article for Rs. 4000 and listed it at 4 times the
purchase price. He then allowed 30% trade discount and further 3% for
cash payment. Find the profit percentage.

Solution:
Cost Price = Rs. 4000
List Price = Rs. 16000
Trade discount = 30% on List Price
Invoice Price = List Price - Trade discount
= 16000 - 30% of 16000
= 16000 - 4800
= 11200
Cash discount = 3% on invoice price

Net Selling Price = Invoice Price - Cash discount

= 11200 - 3% of 11200
= 11200 - 336

Profit  Profit = Net Selling Price - Cost Price

= 10864 - 4000
= 6864
Profit
Profit %   100
CostPrice
6864
 100
4000
 171.6

10) A trader gave 30% trade discount and 5% cash payment and made
20% Profit on his cost price of Rs. 8000. Find the list price.

Solution :
Cost Price = 8000
Let List Price = Rs. x
Invoice Price = List Price - Trade discount
= x - 30% of x
= 0.7x
31
 Cash discount is given on Invoice Price = 5%
 Net Selling Price = Invoice Price - Cash discount
= 0.7x - 5% of 0.7x
= 0.7x -0.035x
= 0.665x
 100 + Profit % 
Net Selling Price = Cost Price  
 100 
 100 + 20 
0.665x = 8000  
 100 
0.665x = 8000 (1.2)
0.665x = 9600
9600
 x  14436.09
0.665
 List Price = 14436.09

11) A shopkeeper gave 30% trade discount and a further 2% cash discount
on an item and sold it for a net price of Rs. 40000 and still made 25%
profit on cost. Find the list price and cost price.

Solution :
Let List Price = Rs. x
Trade discount = 30% on List Price
 Invoice Price = List Price - Trade discount
= x - 30% of x
= 0.7x
Cash discount is 2% on Invoice Price
Net Selling Price = Invoice Price - Cash discount
= 0.7x - 2% of 0.7x
= 0.7x - 0.014x
= 0.686x
But Net Selling Price = 40000
 40000 0.686 x
40000
x  58309.04
0.686
 100 + Profit % 
Net Selling Price = Cost Price  
 100 
 100 + 25 
40000 = Cost Price  
 100 
40000
 Cost Price 
1.25
 32000

32
2.5 EXERCISES

1) After giving a 12% discount on the list price, a pant is sold for
Rs. 1056, Find the List price.
2) A Trader bought gift item for Rs. 3,600 and listed it for Rs. 8,500. He
gave 9% discount on the list price, what was his profit percentage?
3) A trader purchased a cupboard and listed it four times his purchase
price and then allowed a 50% discount on the list price. Find the profit
percentage.
4) A trader purchased an item for Rs. 4,000 and after giving 20%
discount on the list price, he made 44% profit on his cost. Find the list
price.
5) A trader gave 20% discount on list price made 44% profit on his cost.
If the list price was Rs. 720, find his cost price.
6) After giving 20% discount, a pen was sold for Rs. 304 and 52% profit
on cost was made. Find the list price and cost price.
7) A trader gave 10 trade discount on the list price and a further 1% cash
discount on the invoice price, if the list price was Rs. 2430, then find
net selling price.
8) A trader gave 10% trade discount and a further 1% discount for cash
payment and sold a bathroom fitting for Rs. 216513. Find the list
price.
9) A trader purchased a gift item for Rs. 4,000 and listed it 2.5 times the
purchase price she then allowed 40% discount and further 4% for cash
payment. Find the percentage profit.
10) After giving 25% trade discount and a further 4% discount for cash
payment a merchant made 19.52% profit. If the list price was
Rs. 16600 find the merchant’s cost price.
11) A merchant allowed 30% trade discount and a further 2% cash
payment discount on an item and sold it for a net price of Rs. 30870
and still made 20% profit on cost. Find the merchant’s list price and
cost price.

Answers :
1) Rs. 1200 2) 114.896% 3) 100% 4) Rs. 7200
5) Rs. 400 6) Rs. 380, Rs. 200 7) Rs. 2165.13
8) Rs. 243000 9) 44% 10) Rs. 10000
11) Rs. 45000 12) Rs. 25725

33
2.6 COMMISSION AND BROKERAGE

Most of the manufacturers do not sell their goods directly to the

customers. They employ other to sell goods for them. Traders who by and
sell goods also sometimes employ others to buy and or / sell goods for
them.

An agent or a commission agent is a person who buys and or / sells goods

for another person. The person who employs the services of the agent is
called the principal and the remuneration given by the principal to the
agent is called commission.

A commission agent may sells goods for cash or on credit. If the sale takes
place on credit, then there could be a risk of payment default.

A Del credere agent sells goods and guarantees for the collection of dues
from the customers to the principal. for this he or she charges extra
commission which is also known as del credere.

A broker is an agent who brings together buyer and seller and negotiated
the sale. For this he or she charges a commission called brokerage from
buyer and the seller.

An auctioneer sells the goods by public audition to the highest bidder.

Solved Examples : (Commission and Brokerage)

1) An agent charged 10% commission on sales and thus earned Rs. 5000.
Find the value of sales.

Solution :
Sales = ?, Commission = 10% of sales
But commission = 5000 (Given)
Commission = 10% of sales
5000 = 10% of sales
1
5000 =  sales
100
5000  100
  Sales
10
 Sales = Rs. 50000

2) An agent sold goods worth Rs. 30000 and after deducting his
commission, remitted Rs. 27125 to the principal. Find the rate of
commission charged by the agent.

34
Solution :
Total Sales = Rs. 30000
Amount remitted = 27125
 Commission = 30000 - 27125
= 2875
Late rate of commission = x%
Commission = x% of 30000
1
 2875 = x   30000
100
 2875 =300x
2875
 x  9.58 ; 10%
300

4) A manufactured gave his agent 7% commission plus 4% del credere.

The agent sold goods worth Rs. 25000. What amount should the agent
give principal after deducting his commission?

Solution :
Total Sales = Rs. 25000
Ordinary Commission = 7% of 25000
1
 7  25000
100
 1750

Del credere = 4% of 25000

1
 4  25000
100
 1000

 Total Commission = Ordinary Commission + Del credere

 1750  1000
 2750

Amount remitted after deducting his commission

= 25000 - 2750
= 22250

4) A salesman receives 4% commission on sales upto Rs. 6000 and 5%

commission on sales above Rs. 6000. If he sold goods worth Rs. 8000
in a week, find the commission earned by him.

35
Solution :
4
Commission at 4% on   6000
100
= 240

Additional Commission at 5% on (8000 - 6000)

= 5% on 2000
1
 5  2000
100
= 100

Total Commission = 240 + 100 = 340

5) A company fixed the rate of commission to its salesman as follows :

5% on the first 12000,
9% on next 8000,
10% on next 9000 and 6% on balance.
Find the commission of a Salesman who received Sales worth
Rs. 33000.

Solution :
Total Sales = 33000 = (12000 + 8000 + 9000 + 4000)
Commission = 5% on 12000 + 9% on 8000 + 10% on 9000 + 6% on
4000 (balance)
1 1 1 1
 5 12000  9   8000  10   9000  6   4000
100 100 100 100
 600  720  900  240
= `2460

6) A Company pays its salesman a monthly salary of Rs. 10000 and

commission as follows : 2% on sales above Rs. 10000 and upto
Rs. 16000 2.5% on sales over Rs. 16000 and upto Rs. 20000 3% on
sales over Rs. 20000.

Find the total monthly remuneration of a salesman who sold goods

worth Rs. 35000 in a month.

Solution :
Monthly Salary = Rs. 10000
Commission @2% between 10000 & 16000 = (16000 - 10000)
 2.5% on 4000 = 100
3% on sales over 20000 i.e. (35000 - 20000)
= 3% on 15000 = 450
Total Commission = 120 + 100 + 450 = 670
Total monthly remuneration = 10000 + Total Commission
= 10000 + 670
= 10670

36
7) A Salesman is allowed 8% commission on total sales plus a bonus of
2% on the sales exceeding Rs. 15000. If he earned Rs. 1600 on
commission done, find his total earnings.

Solution :
Commission = Rs. 1600
Let Total Sales = Rs. x
Commission = 8% of x
1
1600  8  x
100
1600  0.08 x
1600
x  Rs. 20,000
0.08
 Total Sales = 20000
If sales exceeds Rs. 15000 then bonus will be @2%
= 2% of (20000 - 15000)
= 2% of 5000
1
= 2  5000100
100
Total earnings = 1600 + 100 = 1700

8) A salesgirl is allowed 8% commission on total sales plus 3% bonus on

sales above Rs. 24000. If her total earnings are Rs. 3440 then find the
value of her sales.

Solution : Commission + bonus = 3440

Let total Sales be Rs. x
Commission @ 8% on x = 8% of x
1
 8 x
100
 0.08 x
Commission + bonus = 3440
Bonus = 3% of (x - 24000)
Commission + 3% of (x - 24000) = 3440
 3%of  x  24000  3440 Commission

37
 1
 3   x  24000  3440 0.08 x
100
1 1
 3  x  3  24000  3440  0.08 x
100 100
 0.03x  720  3440  0.08 x
 0.03x  0.08 x  3440  720
 0.11x 4160
4160
x  37818.19
0.11

9) A house was sold through a broker for Rs. 90,00,000 who charged
2.5% from the buyer and 1.5% from the seller. Find the amount paid
by the buyer. Also find the amounts received by the seller and the
broker.

Solution : - Total Sales = Rs. 90,00,000

Amount paid by buyer = Total purchase + brokerage
= 90,00,000 + 2.5% of 90,00,000
= 90,00,000 + 225000
= 92,25,000

Amount received by seller

= Total Sales - brokerage
= 90,00,000 - 1.5% of 90,00,000
= 90,00,000 - 1,35,000
= 88,65,000

Amount received by broker

= 2,25,000 + 1,35,000
= 3,60,000

10) A Trader instructed his agent to buy 600 caps and sell them 50%
above the purchase price. The agent charged 2% commission on the
purchase and 3% commission on sales and thus earned Rs. 2000 as
total commission what was the purchase price of a single cap?

Solution :
Let purchase price of a single cap = Rs. x
Selling price of 600 caps = 600x + 900x
= 900x

 Commission of 2% on purchase = 2% of 600x

1
 2  600 x
100
 12 x
38
  Commission of 3% on Sales = 3% of 900x
1
 3  900 x
100
 27 x

 Total Commission = 12x + 27x

 39x

This is given to be 2000

 39 x  2000
2000
 x 
39
 x  51.28 ; 52
Purchase price of a single cap = 52

11) A del credre agent charges 3% commission on cash sales and 5%

commission on credit sales. In a particular year, he earned on an
average 4.5% commission on total sales. Find the ratio of his cash
sales to credit sales.

Solution :
Let Cash Sales = Rs. x
Credit Sales = Rs. y
3
Commission at 3% on Cash Sales  x
100
 0.03x
Commission at 5% on Credit Sales = 0.05y
Total Commission = 0.03x + 0.05y
But given that
Total Commission = 4.5% on Sales
4.5
 (Cash Sales + Credit Sales)
100
= 0.045 (x + y)
= 0.045x + 0.045y

Thus we have,
Total Commission
 0.03 x  0.05 y  0.045 x  0.045 y
 0.005 y  0.015 x
0.005 x
 
0.015 y
1 x
 
3 y

39
12) After deducting his commission at 6% on first Rs. 90,000 and 9% on
balance of sales made by him, an agent remitted Rs. 96,000 to his
principal. Find the value of goods sold by him.

Solution :
Let Total Sales be Rs. x
 Commission at 6% on first Rs. 90000
6
  90000  `5400
100
Commission at 9% on remaining Sales i.e. (x - 90000)
9
   x  90000 
100
 0.09 x  8100
 Total Commission = 5400 + 0.09x - 8100
=0.09x - 2700
Agent remitted to the principal
= Sales Value - Total Commission
= x - (0.09x - 2700)
= x - 0.09x + 2700
=0.91x + 2700

This is given to be 96000

 0.91x  2700  96000
 0.91x  960002700
93300
x
0.91
 x  102527.47

13) A Salesman is paid a fixed monthly salary plus a commission at a

certain rate on sales. The salesman received Rs. 1130 and Rs. 1360 as
remuneration for two successive months and his sales were Rs. 17100
and Rs. 21700 respected. Find the fixed monthly salary and the rate of
commission.

Solution :
Remuneration = Salary + Commission
Let Salary Rs. x
Commission rate = y%
 1130  x  y % of 17100
 1130  x  171y ………….. (1)
1360 = x + y% of 21700
 1360  x  217 y ………….. (2)

40
 (1) - (2)
1130x  171y
1360  x  217 y
230 46 y
230
y  5%
46

Rate of commission = 5%
Putting y = 5 in (1),
1130 = x + 5% of 17100
i.e. 1130 = x + 5(171)
1130 = x + 855
 x  1130  855
 x  275
 Salary = `275

2.7 EXERCISES

1) An agent earned 4794 after charging 8.5% commission on sales. Find

the value of sales.
2) An agent sold goods worth Rs. 25000 and after deducting his
commission, remitted Rs. 24125 to the principal. Find the rate of
commission charged by the agent.
3) A manufacturer gave his agent 6% commission plus 3% del credere.
One agent sold goods worth Rs. 22000. What amount should the agent
give the principal after deducting his commission?
4) A salesgirl receives 3.5% commission on sales upto Rs. 5000. If she
sold goods worth Rs. 7500 in a week, find the commission earned by
her.
5) A company fixed the rate of commission to its salesman as follows :
3% on first 1000
4% on next Rs. 9000
5% on next Rs. 8000
6% on balance
Find the remuneration of a salesman who secured sales worth Rs.
32500.
6) A Salesman is allowed 7% commission on total sales plus a bonus at
2.5% on the sales above Rs. 15000. If he earned Rs. 1400 on
commission, alone, Find his total earnings.

41
7) A sales girl is allowed 8% commission on total sales plus 2% bonus on
sales above Rs. 24000. If her total earnings are 2420 than find the
value of her sales.
8) A house was sold through a broker for 80,00,000 who charges 2.5%
from the buyer and 1.5% from the seller. Find the amount paid by the
buyer. Also find the amount received by the seller and the broker.
9) A trader instructed his agent to buy 400 caps and sell them 50% above
the purchase price. The agent charged 1% commission on the purchase
and 2% commission on the sales and thus earned Rs. 1000 as total
commission what was the purchase price of a single cap?
10) A del credere agent charges 3% commission on cash sales and 5%
commission or credit sales. In a particular year, he earned on an
average 4.5% commission on total sales find the ratio of his cash sales
to credit sales.
11) An agent was paid Rs. 22275 as commission on total sales. If the rate
of commission was 12% and the price of each TV was Rs. 6875, find
the number of TV’s he sold.
12) A Company fixed the rate of commission to its salesman as follows
3% on first Rs. 5000, 5% on the next Rs. 8000, 8% on next Rs. 10000
and 11% on the balance. The company had agreed to pay 114% of
total sales as bonus it the sales crossed Rs. 30000. A salesman of the
company secured sales worth Rs. 32000. Calculate total earnings of
the salesman.

Answers :
1) Rs. 56,400 2) 3.5% 3) Rs. 20000 4) Rs. 287.5
5) Rs. 1,390 6) Rs. 1,525 7) Rs. 29,000
8) Rs. 82,00,000, Rs. 78,80,000,Rs. 3,20,000 9) 100 10) 1:3
11) 27 12) Rs. 2,420

Glossary :
Agent or Commission Agent : A person or a firm that buys and / or sells
goods for another person or firm, for a remuneration (which is called
commission and which is usually a percentage on the sales value.)

Broker : An agent who brings together prospective buyer and seller and
negotiates a deal, charging a commission from both the buyer and the
seller.

Cash Discount (C.D) : A reduction given on the invoice price for cash
payment, usually by a manufacturer or a trader to another trader, thereby
lowering the invoice price to the net selling price. Cash discount is
specified as a percentage on the invoice price.

Cost Price (C.P.) : The price at which an article is purchased.

42
Del Credere agent : A commission agent who guarantees the principal
the collection of dues from the customers for an extra remuneration (above
the usual commission) which is called as del credere commission.

Discount : A reduction in the price given to attract customers. Discount is

specified as a percentage on the price.

Invoice Price (1. P) or Reduced List Price : The list price minus the
trade discount.

List Price (L.P.) or Printed Price or Marked Price or Catalogue Price:

It is the price printed on goods, which is found in the price list or
catalogue, before giving any discount.

Loss : A negative profit.

Net Selling Price (N.S.P.) : The price at which an article is actually sold.

Principal : The person or firm which employs the commission agent.

Profit : The difference between the net selling price and the cost price. If
the profit is negative, it is called a loss.

Trade Discount (T.D.) : A reduction on the list price given by a

manufacturer or a trader to a trader, thereby lowering the list Price to the
invoice price. Trade Discount is specified as a percentage on the list price.



43
 3
SIMPLE INTEREST AND
COMPOUND INTEREST
Unit Structure :

3.0 Objectives
3.1 Introduction
3.2 Definitions of Terms Used In This Chapter
3.3 Simple Interest
3.4 Compound Interest

3.0 OBJECTIVES

After reading this chapter you will be able to:

 Define interest, principal, rate of interest, period.
 Find simple interest (SI), rate of S.I., period of investment.
 Find Compound Interest (CI), rate of C.I., Amount accumulated at the
end of a period.
 Compound interest compounded yearly, half-yearly, quarterly or
monthly.

3.1 INTRODUCTION

In every day life individuals and business firms borrow money from
various sources for different reasons. This amount of money borrowed has
to be returned from the lender in a stipulated time by paying some interest
on the amount borrowed. In this chapter we are going to study the two
types of interests viz. simple and compound interest. We start with some
definitions and then proceed with the formula related to both the types of
interests.

3.2 DEFINITIONS OF TERMS USED IN THIS CHAPTER

Principal: The sum borrowed by a person is called its principal. It is

denoted by P.

Period: The time span for which money is lent is called period. It is
denoted by n.

Interest: The amount paid by a borrower to the lender for the use of
money borrowed for a certain period of time is called Interest. It is
denoted by I.

44
Rate of Interest: This is the interest to be paid on the amount of Rs. 100
per annum (i.e. per year). This is denoted by r.

Total Amount: The sum of the principal and interest is called as the total
amount (maturity value) and is denoted by A. Thus, A = P + I .
i.e. Interest paid I = A – P.

3.3 SIMPLE INTEREST

The interest which is payable on the principal only is called as

simple interest (S.I.). For example the interest on Rs. 100 at 11% after one
year is Rs.11 and the amount is 100 + 11 = Rs. 111.
Pnr r
It is calculated by the formula: I = =Pxnx
100 100

Simple Interest = Prinicpal x period x rate of interest

Pnr  nr 
Amount at the end of nth year = A = P + I = P + = P 1  
100  100 

Remark: The period n is always taken in ‘years’. If the period is given in

months/days, it has to be converted into years and used in the above
formula. For example, if period is 4 months then we take n = 4/12 = 1/3 or
if period is 60 days then n = 60/365.

Example 1: If Mr. Sagar borrows Rs. 500 for 2 years at 10% rate of
interest, find (i) simple interest and (ii) total amount.
Ans: Given P = Rs. 500, n = 2 and r = 10 %
Pnr 500 x 2 x 10
(i) I = = = Rs. 100
100 100
(ii) A = P + I = 500 + 100 = Rs. 600

Pnr
3.3.1 Problems involving unknown factors in the formula I =
100
Pnr
The formula I = remaining the same, the unknown factor in
100
the formula is taken to the LHS and its value is computed. For example, if
I x 100
rate of interest is unknown then the formula is rewritten as r  .
Pxn

Example 2: If Mr. Prashant borrows Rs. 1000 for 5 years and pays an
interest of Rs. 300, find rate of interest.
Ans: Given P = 1000, n = 5 and I = Rs. 300
Pnr I x 100 300 x 100
Now, I = r = =6
100 Pxn 1000 x 5

Thus, the rate of interest is 6%.

45
Example 3: Find the period for Rs. 2500 to yield Rs. 900 in simple
interest at 12%.

Ans: Given P = Rs. 2500, I = 900, r = 12%

Pnr I x 100 900 x 100
Now, I = n = =3
100 Pxr 2500 x 12

Thus, the period is 3 years.

Example 4: Find the period for Rs. 1000 to yield Rs. 50 in simple interest
at 10%.

Ans: Given P = Rs. 1000, I = 50, r = 10%

Pnr I x 100 50 x 100
Now, I = n = = 0.5
100 Pxr 1000 x 10
Thus, the period is 0.5 years i.e. 6 months.

Example 5: Mr. Akash lent Rs. 5000 to Mr. Prashant and Rs. 4000 to Mr.
Sagar for 5 years and received total simple interest of Rs. 4950. Find (i)
the rate of interest and (ii) simple interest of each.

Ans: Let the rate of interest be r.

5000 x 5 x r
S.I. for Prashant = = 250r … (1)
100
4000 x 5 x r
and S.I. for Sagar = = 200r … (2)
100
from (1) and (2), we have,
total interest from both = 250r + 200r
= 450r
But total interest received be Mr. Akash = Rs. 4950
4950
 450r = 4950 r = = 11
450
 the rate of interest = 11%

Example 6: The S.I. on a sum of money is one-fourth the principal. If the

period is same as that of the rate of interest then find the rate of interest.

P
Ans: Given I = and n = r
4
Pnr
Now, we know that I =
100
P Pxr xr 100 2
 =  =r
4 100 4
 r2 = 25  r = 5.
 the rate of interest = 5%

46
Example 7: If Rs. 8400 amount to Rs. 11088 in 4 years, what will Rs.
10500 amount to in 5 years at the same rate of interest?

Ans:
(i) Given n = 4, P = Rs. 8400, A = Rs. 11088
 I = A – P = 11088 – 8400 = Rs. 2688
Let r be the rate of interest.
Pnr 8400 x 4 x r
Now, I =  2688 =
100 100
 r = 8%

(ii) To find A when n = 5, P = Rs. 10500, r = 8

nr  5 x 8 140
A = P 1   = 10500 x 1   = 10500 x = 14700
 100   100  100
 the required amount = Rs. 14,700

Example 8: Mr. Shirish borrowed Rs. 12,000 at 9% interest from Mr.

Girish on January 25, 2007. The interest and principal is due on August
10, 2007. Find the interest and total amount paid by Mr. Shirish.

Ans: Since the period is to be taken in years, we first count number of

days from 25th January to 10th August, which is 197 days.
January 6
Pnr 197 9 February 28
Now, I = = 12000 x x
100 365 100 March 31
 I = Rs. 582.9 April 30
Total amount = P + I = 12000 + 582.9 May 31
 A = Rs. 12,582.9 June 30
July 31
August 10
Total 197

Check your progress 10.1

1. Find the SI and amount for the following data giving principal, rate
of interest and number of years:
(i) 1800, 6%, 4 years. (ii) 4500, 8%, 5 years
(iii) 7650, 5.5%, 3 years. (iv) 6000, 7.5%, 6 years
(v) 25000, 8%, 5 years (vi) 20000, 9.5%, 10 years.

Ans: (i) 432, 2232 (ii) 1800, 6300, (iii) 1262.25, 8912.25
(iv) 2700, 8700 (v) 10000, 35000 (vi) 19000, 39000

2. Find the S.I. and the total amount for a principal of Rs. 6000 for 3
years at 6% rate of interest.
Ans: 1080, 7080

47
3. Find the S.I. and the total amount for a principal of Rs. 3300 for 6
years at 3½ % rate of interest.
Ans: 693, 3993
4. Find the S.I. and the total amount for a principal of Rs. 10550 for 2
years at 10¼ % rate of interest.
Ans: 2162.75, 12712.75
5. Find the rate of interest if a person invests Rs. 1000 for 3 years and
receives a S.I. of Rs. 150.
Ans: 5%
6. Find the rate of interest if a person invests Rs. 1200 for 2 years and
receives a S.I. of Rs. 168.
Ans: 7%

7. A person invests Rs. 4050 in a bank which pays 7% S.I. What is the
balance of amount of his savings after (i) six months, (ii) one year?
Ans: 141.75, 283.5

8. A person invests Rs. 3000 in a bank which offers 9% S.I. After how
many years will his balance of amount will be Rs. 3135?
Ans: 6 months

9. Find the principal for which the SI for 4 years at 8% is 585 less than
the SI for 3½ years at 11%.
Ans: 9000

10. Find the principal for which the SI for 5 years at 7% is 250 less than
the SI for 4 years at 10%.
Ans: 5000

11. Find the principal for which the SI for 8 years at 7.5% is 825 less
than the SI for 6½ years at 10.5%.
Ans: 10000

12. Find the principal for which the SI for 3 years at 6% is 230 more
than the SI for 3½ years at 5%.
Ans: 46000

13. After what period of investment would a principal of Rs. 12,350

amount to Rs. 17,043 at 9.5% rate of interest?
Ans: 4 years

14. A person lent Rs. 4000 to Mr. X and Rs. 6000 to Mr. Y for a period
of 10 years and received total of Rs. 3500 as S.I. Find (i) rate of
interest, (ii) S.I. from Mr. X, Mr. Y.
Ans: 3.5%, 1400, 2100

15. Miss Pankaj Kansra lent Rs. 2560 to Mr. Abhishek and Rs. 3650 to
Mr. Ashwin at 6% rate of interest. After how many years should he
receive a total interest of Rs. 3726?
Ans: 10 years
48
16. If the rate of S.I. on a certain principal is same as that of the period
of investment yields same interest as that of the principal, find the
rate of interest.
Ans: 10%
17. If the rate of S.I. on a certain principal is same as that of the period
of investment yields interest equal to one-ninth of the principal, find
the rate of interest.
1
Ans: 3 years
3

18. Find the principal and rate of interest if a certain principal amounts
to Rs. 2250 in 1 year and to Rs. 3750 in 3 years.
Ans: 1500, 50%

19. Find the principal and rate of interest if a certain principal amounts
to Rs. 3340 in 2 years and to Rs. 4175 in 3 years. Ans: 1670, 50%

20. If Rs. 2700 amount Rs. 3078 in 2 years at a certain rate of interest,
what will Rs. 7200 amount to in 4 years at the same rate on interest?
Ans: 7%, 9216

21. At what rate on interest will certain sum of money amount to three
times the principal in 20 years?
Ans: 15%

22. Mr. Chintan earns as interest Rs. 1020 after 3 years by lending Rs.
3000 to Mr. Bhavesh at a certain rate on interest and Rs. 2000 to Mr.
Pratik at a rate on interest 2% more than that of Mr. Bhavesh. Find
the rates on interest.
Ans: 6%, 8%

23. Mr. Chaitanya invested a certain principal for 3 years at 8% and

received an interest of Rs. 2640. Mr. Chihar also invested the same
amount for 6 years at 6%. Find the principal of Mr. Chaitanya and
the interest received by Mr. Chihar after 6 years.
Ans: 11000, 3960

24. Mr. Ashfaque Khan invested some amount in a bank giving 8.5%
rate of interest for 5 years and some amount in another bank at 9%
for 4 years. Find the amounts invested in both the banks if his total
investment was Rs. 75,000 and his total interest was Rs. 29,925.
Ans: 45000, 30000

25. Mrs. Prabhu lent a total of Rs. 48,000 to Mr. Diwakar at 9.5% for 5
years and to Mr. Ratnakar at 9% for 7 years. If she receives a total
interest of Rs. 25,590 find the amount she lent to both.
Ans: 18000, 30000

49
3.4 COMPOUND INTEREST

The interest which is calculated on the amount in the previous year is

called compound interest.

For example, the compound interest on Rs. 100 at 8% after one year is Rs.
8 and after two years is 108 + 8% of 108 = Rs. 116.64

If P is the principal, r is the rate of interest p.a. then the amount at the end
of nth year called as compound amount is given by the formula:
n
A = P  1  r 
 100 

The compound interest is given by the formula:

CI = A – P

Note:
1. The interest may be compounded annually (yearly), semi-annually
(half yearly), quarterly or monthly. Thus, the general formula to calculate
the amount at the end of n years is as follows:
np
A = P 1  r 
 p x 100 

Here p: number of times the interest is compounded in a year.

p = 1 if interest is compounded annually
p = 2 if interest is compounded semi-annually (half-yearly)
p = 4 if interest is compounded quarterly
p = 12 if interest is compounded monthly

2. It is easy to calculate amount first and then the compound interest as

compared with finding interest first and then the total amount in case of
simple interest.

Example 9: Find the compound amount and compound interest of Rs.

1000 invested for 10 years at 8% if the interest is compounded annually.

Ans: Given P = 1000, r = 8, n = 10.

Since the interest is compounded annually, we have
n 10
 r   8 
A = P 1   = 1000 x 1   = 1000 x 2.1589 = Rs. 2158.9
 100   100 

Example 10: Find the principal which will amount to Rs. 11,236 in 2
years at 6% compound interest compounded annually.

50
Ans: Given A = Rs. 11236, n = 2, r = 6 and P = ?
n
 r 
Now, A = P 1  
 100 
2
 6 
 11236 = P  1   = P x 1.1236
 100 
11236
P = = 10,000
1.1236
 the required principal is Rs. 10,000.

Example 11: Find the compound amount and compound interest of

Rs. 1200 invested for 5 years at 5% if the interest is compounded
(i) annually, (ii) semi annually, (iii) quarterly and (iv) monthly.

Ans: Given P = Rs. 1200, r = 5, n = 5

np
Let us recollect the formula A = P 1  r 

 p x 100 
(i) If the interest is compounded annually, p = 1:
n 5
 r   5 
A = P 1   = 1200 x 1   = 1200 x 1.2763 = Rs. 1531.56
 100   100 
CI = A – P = 1531.56 – 1200 = Rs. 331.56

(ii) If the interest is compounded semi-annually, p = 2:

2n 10
 r   5 
A = P 1   = 1200 x 1   = 1200 x 1.28 = Rs. 1536
 2 x 100   200 
CI = A – P = 1536 – 1200 = Rs. 336.

(iii) If the interest is compounded quarterly, p = 4:

4n 20
 r   5 
A = P 1   = 1200 x 1   = 1200 x 1.2820 =
 4 x 100   400 
Rs. 1538.4
CI = A – P = 1538.4 – 1200 = Rs. 338.4

(iv) If the interest is compounded monthly, p = 12:

12 n 60
 r   5 
A = P 1   = 1200 x 1   = 1200 x 1.2834 = Rs. 1540
 12 x 100   1200 
CI = A – P = 1540 – 1200 = Rs. 340

Example 12: Mr. Santosh wants to invest some amount for 4 years in a
bank. Bank X offers 8% interest if compounded half yearly while bank Y
offers 6% interest if compounded monthly. Which bank should Mr.
Santosh select for better benefits?

Ans: Given n = 4.
Let the principal Mr. Santosh wants to invest be P = Rs. 100

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From Bank X: r = 8 and interest is compounded half-yearly, so p = 2.
2n 4
 r   8 
 A = P 1   = 100 x 1  200  = 116.9858 … (1)
 2 x 100   

From Bank Y: r = 6, p = 12
12 n 48
 r   6 
 A = P 1   = 100 x 1  = 127.0489 … (2)
 12 x 100   1200 

Comparing (1) and (2), Dr. Ashwinikumar should invest his amount in
bank Y as it gives more interest at the end of the period.

Example 13: In how many years would Rs. 75,000 amount to

Rs. 1,05,794.907 at 7% compound interest compounded semi-annually?

Ans: Given A = Rs. 105794.907, P = Rs. 75000, r = 7, p = 2

2n
 r 
A = P 1  
 2 x 100 
2n
 7 
 105794.907 = 75000 x  1  
 200 

105794.907
 = (1.035) 2n
75000
2n
 1.41059876 = (1.035)

10
 (1.035) = (1.035) 2n  2n = 10

Thus, n = 5

Example 14: A certain principal amounts to Rs. 4410 after 2 years and to
Rs.4630.50 after 3 years at a certain rate of interest compounded annually.
Find the principal and the rate of interest.

Ans: Let the principal be P and rate of interest be r.

n
 r 
Now, we know that A = P 1  
 100 
From the given data we have,
2 3
 r   r 
4410 = P 1   and 4630.5 = P 1  
 100   100 
2
 4410 = P(1 + 0.01r) … (1)
Do not write ‘1 + 0.01r’
as 1.01r
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 4630.5 = P(1 + 0.01r)3 … (2)

Dividing (2) by (1), we have

4630.5 P(1  0.01r )3

=  1.05 = 1 + 0.01r
4410 P(1  0.01r )2
 0.05 = 0.01r
Thus, r = 5%

Example 15: Find the rate of interest at which a sum of Rs. 2000 amounts
to Rs. 2690 in 3 years given that the interest is compounded half yearly.
( 6 1.345 = 1.05)

Ans: Given P = Rs. 2000, A = Rs. 2680, n = 3, p = 2

2n
 r 
Now, A = P  1  
 2 x 100 
6
 r 
 2690 = 2000 x  1  
 200 
6 6
2690  r   r 
 = 1    1.345 = 1  
2000  200   200 
r r
 6 1.345 = 1 +  1.05 = 1 +
200 200

 r = 0.05 x 200 = 10%

Thus, the rate of compound interest is 10 %.

Example 16: If the interest compounded half yearly on a certain principal

at the end of one year at 8% is Rs. 3264, find the principal.

Ans: Given CI = Rs. 3264, n = 1, p = 2 and r = 8

2
 8 
Now, CI = A – P = P 1   – P
 200 
i.e. 3264 = P[ (1.04) 2 – 1] = 0.0816P
3264
P = = 40000
0.0816
Thus, the principal is Rs. 40,000.

Check your progress 10.2

1. Compute the compound amount and interest on a principal of Rs.

21,000 at 9% p.a. after 5 years.
Ans: 32,311.10, 11,311.10
2. Compute the compound amount and interest on a principal of Rs.
6000 at 11% p.a. after 8 years.
Ans: 13827.23, 7827.23

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3. Compute the compound amount and compound interest of Rs. 5000
if invested at 11% for 3 years and the interest compounded
i) annually, (ii) semi annually, (iii) quarterly and (iv) monthly.
Ans: (i) 6838.16, 1838.16 (ii) 6894.21, 189421
(iii) 6923.92, 1923.92 (iv) 6944.39, 1944.39

4. Compute the compound amount and compound interest of Rs. 1200

if invested at 9% for 2 years and the interest compounded
i) annually, (ii) semi annually, (iii) quarterly and (iv) monthly.
Ans: (i) 1425.72, 225.72 (ii) 1431.02, 231.02
(iii) 1433.8, 233.8 (iv) 1435.7, 235.7

5. Miss Daizy invested Rs. 25,000 for 5 years at 7.5% with the interest
compounded semi-annually. Find the compound interest at the end
of 5 years. Ans: 11,126.10

6. Mr. Dayanand borrowed a sum of Rs. 6500 from his friend at 9%

interest compounded quarterly. Find the interest he has to pay at the
end of 4 years? Ans: 2779.54

7. Mr. Deepak borrowed a sum of Rs. 8000 from his friend at 8%

interest compounded annually. Find the interest he has to pay at the
end of 3 years? Ans:
2077.70

8. Mr. Deshraj borrowed Rs. 1,25,000 for his business for 3 years at
25% interest compounded half yearly. Find the compound amount
and interest after 3 years. Ans: 2,53,410.82;
12,8410.82

9. Mrs. Hemlata bought a Sony Digital Camera for Rs. 15,800 from
Vijay Electronics by paying a part payment of Rs. 2,800. The
remaining amount was to be paid in 3 months with an interest of 9%
compounded monthly on the due amount. How much amount did
Mrs. Hemlata paid and also find the interest.
Ans: 13294.70, 294.70

10. Mr. Irshad bought a Kisan Vikas Patra for Rs. 10000, whose
maturing value is Rs. 21,000 in 4½ years. Calculate the rate of
interest if the compound interest is compounded quarterly.
Ans: 16.8%

11. What sum of money will amount to Rs. 11236 in 2 years at 6% p.a.
compound interest? Ans: 10,000

12. Find the principal which will amount to Rs. 13468.55 in 5 years at
6% interest compounded quarterly. [ (1.015)20 = 1.346855]
Ans: 10000

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13. Find the principal which will amount to Rs. 30626.075 in 3 years at
7% interest compounded yearly. Ans: 25000

14. Find the principal if the compound interest payable annually at 8%

p.a. for 2 years is Rs. 1664. Ans: 10000

15. If Mr. Sagar wants to earn Rs. 50000 after 4 years by investing a
certain amount in a company at 10% rate of interest compounded
annually, how much should he invest? Ans:
34150.67

16. Find after how many years will Rs. 4000 amount to Rs. 4494.40 at
6% rate of interest compounded yearly. Ans: n = 2

17. Find after how many years Rs. 10,000 amount to Rs. 12,155 at 10%
rate of interest compounded half-yearly. Ans: n = 1

18. Find the rate of interest at which a principal of Rs.10000 amounts to

Rs. 11236 after 2 years. Ans: 6%

19. Find the rate of interest at which a principal of Rs.50000 amounts to

Rs. 62985.6 after 3 years. ( 3 1.259712 = 1.08) Ans: 8%

20. Mrs. Manisha Lokhande deposited Rs. 20,000 in a bank for 5 years.
If she received Rs.3112.50 as interest at the end of 2 years, find the
rate of interest p.a. compounded annually. Ans: 7.5%

21. A bank X announces a super fixed deposit scheme for its customers
offering 10% interest compounded half yearly for 6 years. Another
bank Y offers 12% simple interest for the same period. Which bank’s
scheme is more beneficial for the customers? Ans: Bank X

22. ABC bank offers 9% interest compounded yearly while XYZ bank
offers 7% interest compounded quarterly. If Mr. Arunachalam wants
to invest Rs. 18000 for 5 years, which bank should he choose?
Ans: Bank ABC

23. Mangesh borrowed a certain amount from Manish at a rate of 9% for

4 years. He paid Rs. 360 as simple interest to Manish. This amount
he invested in a bank for 3 years at 11% rate of interest compounded
quarterly. Find the compound interest Mangesh received from the
bank after 3 years. Ans:
1384.78

24. On a certain principal for 3 years the compound interest

compounded annually is Rs. 1125.215 while the simple interest is
Rs. 1050, find the principal and the rate of interest.
Ans: 5000, 7%

55
25. On a certain principal for 4 years the compound interest
compounded annually is Rs. 13923 while the simple interest is Rs.
12000, find the principal and the rate of interest.
Ans: 30000, 10%.

26. Which investment is better for Mr. Hariom Sharma (i) 6%

compounded half yearly or (ii) 6.2% compounded quarterly?
Ans:

27. Which investment is better for Mr. Suyog Apte (i) 9% compounded
yearly or (ii) 8.8% compounded quarterly?
Ans:

28. A bank X offers 7% interest compounded semi-annually while

another bank offers 7.2% interest compounded monthly. Which bank
gives more interest at the end of the year?
Ans:
29. Mr. Nitin Tare has Rs. 10000 to be deposited in a bank. One bank
offers 8% interest p.a. compounded half yearly, while the other
offers 9% p.a. compounded annually. Calculate the returns in both
banks after 3 years. Which bank offers maximum return after 3
years?
Ans:



56