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Compound Interest :- When money is deposited in banks, the interest is calculated on the interest
earned in the previous year. This is compound interest.
Exercise 3:-
1) A person deposits Rs.25,000.00 in a bank which pays 20% annual compound interest.
Find the interest for each year and accumulated amount in two years.
2) Find the amount a person gets after 3 years if he deposits Rs.30,000.00 in a bank which
pays 15% annual compound interest.
3) A person deposits Rs.50,000.00 in a bank which pays 18% annual compound interest for
two years. At the beginning of the second he takes a loan of Rs. 50,000.00 at 20% simple
interest. Can he settle the loan by withdrawing the deposit at the end of the second year?. If
so how much will be left? If not how much more he has to pay?
4) A person starts a fixed deposit with Rs. 10,000. The interest he earns in the second year is
Rs. 1344.00. If the annual rate of interest is R% find the first year interest in terms of R and
show that R2+100R-1344 = 0.
5) Show that the accumulated amount of a p deposit at the annual rate of 15% in one year is
. Hence find the accumulated amount of a p deposit at the annual rate of 15% in two
years .
A person earns an interest of Rs.99,187.50 from a deposit at the annual rate of 15% in two
years. Find his deposit.
P.M.Perera (B.Sc, M.Sc, AIMIS)
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