UNIT II

ARITHMETIC
CHAPTER
COMPOUND INTEREST
2
2.1 Compound Interest

PRACTICE 2.1
Read / Understand / Think / Do
Keeping Skill Sharp
1. (a) What is the simple interest on the sum of P at the rate of R% in T years?
(b) Write the formula to calculate the compound amount when the principal, rate and time
are given.
(c) What is the formula to compute the compound interest when the principal, rate and time
are given?
(d) Write the formula to calculate the compound interest when the principal, rate and time in
years and months are given.
Solution:
PTR
(a) The simple interest on the sum of P at the rate of R% in T years is 100 .
(b) The formula to calculate the compound amount (CA) when the principal, rate and time are
given, is given as,
CA = P1 + 100 ,
R T
 
where P = principal/initial sum, R = rate of interest and T = duration of time.
(c) The formula to compute the compound interest (CI) when the principal (P), rate of interest (R)
and time (T) are given, is given by,
CI = P1 + 100 – 1 ,
R T
  
(d) The formula to calculate the compound interest when the principal (P), rate (R) and time (T) in
years and months(m) are given, is given below,
CI(YM) = P1 + 100 1 + 1200 – 1
R T mR
    

1
Check Your Performance
Answer the following questions for each problem.
2. Which values are inserted in the following blanks? Compute.
Principal Rate of Compound interest Time (yrs) Compound Amount
(a) Rs. 700 8% p.a. 3 (yearly) ------------
1
(b) Rs. 12000 6% p.a. 1 2 (half yearly) ------------
(c) Rs. 1,50,000 12% p.a. 2 (quarter yearly) ------------
(d) ------------ 13% p.a. 2 (yearly) Rs. 191535
(e) Rs. 200000 10% p.a. ----- (yearly) Rs. 292820
(f) Rs. 500000 ---------- 3 (yearly) Rs. 760437.50
Solution:
(a) Rs. 881.80 (b) Rs. 13112.72 (c) Rs. 190015.51 (d) Rs. 150000
(e) 4 yearly (f) 15% p.a.
3. (i) Sunita plans to deposit Rs. 21000 in any bank for 3 years.
(a) Define compound interest.
(b) How much amount will she get at 10% simple interest when she deposits it in a bank
N ? Calculate it.
1
(c) How much amount will she get at 9 % interest being compounded annually when
2
she deposits it in another bank M ? Calculate it.
(d) Which bank is better to deposit the sum and how much more amount will she get
from the better bank ?
(ii) Bishal thinks to burrow Rs. 15000 from Sovan for 2 years.
(a) Write any one difference between simple interest and compound interest.
(b) How much total amount would Bishal have to pay to Sovan at the rate of interest of
10% p.a. compounded annually after 2 years? Find.
(c) How much total amount would Bishal have to pay to Sovan at the rate of simple
interest of 11% p.a. after 2 years? Find.
(d) In which process would Bishal pay more amount to Sovan and by how many more
percentage ?
Solution: (i)
(a) The interest taken the sum of the principal and the previous interest, is called compound
interst.
(b) Case I (Bank N)
Principal (P) = Rs. 21,000
Time (T) = 3 yrs.
Rate of interest (R) = 10% p.a.
= P + I = P + 100 = P1 + 100
PTR TR
Amount
 
= 21,000 1 + 100 
3 × 10
 
= 21,000 × (1.3)
= Rs. 27,300
2
 (c) Case II (Bank M)
Principal (P) = Rs. 21,000
Time (T) = 3 yrs.
1 19
Rate of interest (R) = 9 2 % = 2 %

∴ C.A(annually) = P1 + 100

R T
 
 19 3

= 21,000 1 + 100
2 
 
= 21,000 1 + 200
19 3

 
3
= 21,000 (1.095)
= Rs. 27571.58
(d) From above calculation.
CA(annually) > Normal amount
∴ Bank is better for her to deposit money
It gives her more amount at the end of 3 yrs. or in other words gives more interest.
Now, CA(annually) – A(Normal) = Rs. 27571.58 – Rs. 27300 = Rs. 271.58
∴ She will get Rs. 271.58 more amount from bank M than from bank N.
(ii) (b) Given,
Principal (P) = Rs. 15,000
Time (T) = 2 yrs.
Rate of interest (R) = 10% p.a.
= P1 + 100 = 15,000 1 + 100
R T 10 2
CA(annually)
   
2
= 15,000 × (1.1) = 15,000 × 1.21 = Rs. 18,150
∴ Bishal have to pay Sovan Rs. 18,150 after 2 yrs.
(c) Rate of interest (R) = 11% p.a.
Principal (P) = Rs. 15,000
Time (T) = 2 yrs.
= P1 + 100 = 15,000 1 + 100 
TR 2 × 11
∴ CA
   
= 15,000 × 1.22
= Rs. 18,300
∴ Bishal have to pay Sovan Rs. 18,300 after 2 yrs.
(d) Bashal have to Sovan more amount in the second process
i.e. Simple interest process
Different of amount M normal amount and CA = Rs. 18,300 – Rs. 18,150 = Rs. 150
150
∴ % of amount more in normal amount than CA = 18150 × 100% = 0.826%

∴ Bishal pays 0.826% more amount with simple interest than with compound interest
after 2 yrs.

3
4. (i) A girl plans to deposit Rs. 10000 in the fixed deposit account in any cooperative limited
for 3 years 6 months.
(a) How is compound interest yearly and half yearly different ?
(b) A cooperative A pays compound interest compounded semi-annually at the rate of
16% p.a.
(c) Another cooperative B pays compound interest compounded annually at the rate of
17% p.a.
(d) In which bank will she deposit it to get more interest and by how much percent ?
(ii) Rohit plans to deposit Rs. 150000 in the fixed deposit account in any bank.
(a) A bank P pays compound interest compounded annually at the rate of 12.13% p.a.
1
for 3 years.
2
(b) A bank Q pays compound interest compounded semi-annually at the rate of 11.75%
p.a. for the same time.
(c) Which bank will be better to deposit the money ? Why ?
Solution:
(i) (b) For co-operative A,
Principal (P) = Rs. 10,000
Time (T) = 8 yrs. 6 months
Rate of interest (R) = 10% p.a.
∴ CI(semi annually) = P1 + 200 1 + 1200 – 1
R 2T mR
    
= 10,0001 + 200  6 × 16 
16 2×3

  1 + 1200  – 1
= 10,000 [(1.08)6 (1 + 0.08) – 1]
= 10,000 [(1.08)7 – 1]
= 10,000 × 0.7138242688
= Rs. 7138.24
(c) For co-operative B,
Principal (P) = Rs. 10,000
Rate of interest (R) = 17% p.a.
Time (T) = 3 yrs. 6 months
= P1 + 100 1 + 1200 – 1
R T mR
∴ CI(annually)
    
= 10,0001 + 100 1 + 1200  – 1
17 3 6 × 17
    
3
= 10,000[(1.17) (1.089) – 1]
= 10,000 [1.737750105 – 1]
= Rs. 7377.50
(d) Since from above calculation,
CI(annually) > CI(semi annually)
∴ He will deposit money in Co-operative B.
% of more interest co-operative B than in co-operative A

4
 CI(annually) – CI(semi-annually)
= CI(semi-annually) × 100%
7377.50 – 7168.24 239.26
= 7138.24 × 100% = 7138.24 × 100%
= 3.35%
∴ 3.35% will get more interest in co-operative B than in co-operative A by 3.35%.
(ii) (a) For bank P,
Principal (P) = Rs. 1,50,000
Rate of interest (R) = 12.13% p.a.
1
Time (T) = 3 2 yrs. = 3 yrs. 6 months

= P1 + 100 1 + 1200 – 1

R T mR
∴ CI(annually)
    
= 1,50,0001 + 100  1 + 1200  – 1
12.13 3 6 × 12.13
    
3
= 1,50,000[(1.1213) (1.06065) – 1]
= 1,50,000 [1.4953317778 – 1]
= 1,50,000 × 0.4953317778
= Rs. 74299.77
(b) For bank Q,
Principal (P) = Rs. 1,50,000
Rate of interest (R) = 11.75% p.a.
Time (T) = 3 yrs. 6 months
∴ CI(semi-annually) = P1 + 200 1 + 1200 – 1
R 2T mR
    
= 1,50,0001 + 200   6 × 11.75 
11.75 2×3

  1 + 1200  – 1
= 1,50,000[(1.05875)6 (1.05875) – 1]
= 1,50,000[1.491262041 – 1]
= 1,50,000 × 0.491262041
= Rs. 73689.31
(c) Since from above calculation,
CI(annually) > CI(semi-annually)
So, the bank P will be better to deposit the money because it gives more interest.
5. (i) A person borrowed Rs. 16000 from a bank at 12.5% per annum simple interest for 3
years and but he loans the whole amount to a shopkeeper at the same rate of compound
interest for the same time.
(a) Find the amount to be paid to the bank as simple interest.
(b) Find the amount to be get to the shopkeeper as compound interest.
(c) How much will he gain after 3 years ?
(ii) Krishna borrowed Rs. 250000 from a bank at 8% per annum compound interest
annually for 2 years and but the whole amount lent to his friend at the same rate of
compound interest semi-annually for the same time.
(a) Find the amount to be paid to the bank as compound interest annually.

5
 (b) Find the amount to be gotten to the shopkeeper as compound interest semi-annually.
(c) How much will he gain after 2 years?
Solution:
(i) (a) Given,
Principal (P) = Rs. 16,000
Rate of interest (R) = 12.5%
Time (T) = 3 yrs.
PTR 16000 × 3 × 12.5
∴ SI = 10 = 100 = Rs. 6,000

∴ Simple amount (P) = P + SI = Rs. 16,000 + Rs. 6,000 = Rs. 22,000

= P1 + 100  = 16,000 1 + 100 
R T 12.5 3
(b) CA(annually)
   
= 16,000 × 1.423828125 = Rs. 22,781.25
∴ Money gain = CA(annually) – A = Rs. 22,781.25 – Rs. 22,000 = Rs. 781.25
∴ He will gain Rs. 781.25 after 3 yrs.
(ii) Given,
Principal (P) = Rs. 2,50,000
Rate of interest (R) = 8%
Time (T) = 2 yrs
= P1 + 100 = Rs. 2,50,000 1 + 100
R T 8 2
(a) CA(annually)
   
2
= Rs. 2,50,000 × (1.08) = Rs. 2,91,600
(b) CA(semi-annually) = P1 + 200 = Rs. 2,50,000 1 + 200
R 2T 8 2×2
   
= Rs. 2,50,000 × 1.16985856
= Rs. 292464.64
(c) Gain = CA(semi-annually) – CA(annually) [ CA(semi-annually) > CA(annually)]
= Rs. 2,92,464.64 – Rs. 2,91,600 = Rs. 864.64
6. (i) A bank provides compound interest and simple interest on Rs. 5120 for 3 years at 12.5%
per annum in two ways.
(a) What is the compound interest for the given information?
(b) What is the simple interest for the given information?
(c) Find the difference between compound interest and simple interest.
(ii) The difference between the simple and compound interest on a sum of money at the rate
of 10% p.a. is Rs. 240 in 2 years.
(a) Let us suppose the required sum be x. Find the simple interest in term of x.
(b) Find the compound interest in term of x.
(c) Find the value of x. What is the sum ? Write.
(iii) The simple interest on a sum of money in 2 years is Rs. 90 less than its compound interest.
If the rate of interest in a year is 15%, find the sum.
Solution:
(i) (a) Principal (P) = Rs. 5120
Time (T) = 3 yrs.

6
 Rate of interest (R) = 12.5% p.a.
= P1 + 100 – 1 = Rs. 5120 1 + 100  – 1
R T 12.5 3
CI(annually)
     
= Rs. 5120[(1.125)3 – 1] = Rs. 5120 × 0.423828125 = Rs. 2170
PTR 5120 × 3 × 12.5
(b) S.I. = 100 = 100 = Rs. 1920
(c) CI(annually) – SI = Rs. 2170 – Rs. 1920 = Rs. 250
(ii) Given,
CI(annually) – SI = Rs. 240
Rate of interest (R) = 10% p.a.
Time (T) = 2 yrs.
(a) Principal (P) = x
PTR x × 2 × 10 x
SI = 100 = 100 =5

= P1 + 100 – 1 = x1 + 100 – 1

R T 10 2
(b) CI(annually)
     
= x10 – 1 = x100 – 1
11 2 121
    
21x
= 100
(c) Given,
CI(annually) – SI = Rs. 240
21x x
or, 100 – 5 = Rs. 240
21x – 20x
or, 100 = Rs. 240
or, x = Rs. 240 × 100
∴ x = Rs. 24,000
Hence Principal (P) = x = Rs. 24,000.
(iii) Given,
SI = CI(annually) – Rs. 90
Time (T) = 2 yrs.
Rate of interest (R) = 15%
Principal (P) = ?
Here,
SI = CI(annually) – Rs. 90
or, CI(annually) – SI = Rs. 90
or, P1 + 100 – 1 – 100 = Rs. 90
R T PTR
  
or, P1 + 100 – 1 – 100 = Rs. 90
R T TR
  
or, P1 + 100 – 1 – 100  = Rs. 90
15 2 2 × 15
  
or, P[(1.15)2 – 1 – 0.3] = Rs. 90

7
 or, P[1.3225 – 1.3] = Rs. 90
or, P × 0.0225 = Rs. 90
Rs. 90
∴ P = 0.0225 = Rs. 4000
Hence, the sum is Rs. 4,000.
7. (i) A girl deposits Rs. 500 in a bank and gets Rs. 605 at 10% per annum compounded
annually after some time.
(a) Find the time when she gets Rs. 605 from the bank.
(b) What is the simple interest on the same sum at the same rate for the same time ?
(c) Which interest is more compound interest or simple interest and by how much
percentage ? Find.
(ii) A finance company provides the interest at 20 paisa per rupee per year.
(a) What is the rate on compound interest ?
(b) In what time will Rs. 1,500 yield Rs. 496.50 as compound interest at the same rate of
compounded semi-annually ?
(c) What is the compound interest on the same sum at the same rate for the same time
compounded annually? Find it.
(d) Which interest is more compound interest compounded semi-annually or compound
interest annually and by how much percentage ? Find.
Solution:
(i) Principal (P) = Rs. 500, CA(annually) = Rs. 605
Rate of interest (R) = 10%
(a) Time (T) = ?
Now, we have,
CA(annually) = P1 + 100
R T
 
or, Rs. 605 = Rs. 500 1 + 100
10 T
 
Rs. 605
or, Rs. 500 = (1.10)T
or, 1.21 = (1.10)T
or, (1.10)2 = (1.10)T
∴ T = 2 yrs.
PTR 500 × 2 × 10
(b) SI = 100 = 100 = Rs. 50.
(c) CI(annually) = CA(annually) – P = Rs. 605 – Rs. 500 = Rs. 105.
From above calculation,
CI(annually) > SI
CI(annually) – SI = Rs. 105 – Rs. 50 = Rs. 55
CI – SI
∴ More percent on CI than SI = SI × 100%
55
= 50 × 100% = 110%
∴ CI is more than SI by 110%.

8
(ii) (a) Given,
Interest on 1 rupee per year = 20 paisa
i.e. Interest on 100 paisa per year = 20 × 100 paisa = Rs. 20
∴ Rate of interest (R) = 20% p.a.
(b) Principal (P) = Rs. 1,500
CI(semi-annually) = Rs. 496.50
Time (T) = ?
we have,
CI(semi-annually) = Rs. 496.50
or, P1 + 200 – 1 = Rs. 496.50
R 2T
  
or, Rs. 1500 1 + 200 – 1 = Rs. 496.50
20 2T

  
Rs. 496.50
or, [(1.1)2T – 1] = Rs. 1500
or, (1.1)2T – 1 = 0.331
or, (1.1)2T = 0.331 + 1
or, (1.1)2T = 1.331
or, (1.1)2T = (1.1)3
∴ 2T = 3
3 1
or, T = 2 = 1 2 yrs.
(c) Rate of interest (R) = 20% p.a.
Time = 1 yrs 6 months
Principal = Rs. 1500
CI(annually) = ?
we have,
CI(annually) = P1 + 100 1 + 1200 – 1
R T mR
    
= Rs. 1500 1 + 100 1 + 1200  – 1
20 1 6 × 20
    
= Rs. [(1.2) (1.1) – 1]
= Rs. 1500 × 0.32
= Rs. 480
(d) From above calculation,
CI(semi-annually) > CI(annually)
CI(semi-annually) – CI(annually)
More percent on CI(semi-annually) than CI(annually) = CI(annually) × 100%
Rs. 496.50 – Rs. 480
= Rs. 480 × 100%
Rs. 16.50
= Rs. 480 × 100%
= 3.44%
CI(semi-annually) is more than CI(annually) by 3.44%.
9
8. (i) A man gets Rs. 784 by depositing Rs. 625 in a bank for 2 years compounded annually.
(a) What is the rate on compound interest ?
(b) What is the compound interest on the same sum at the same rate for the same time
compounded quarter annually? Find it.
(ii) A girl deposits Rs. 2000 for 2 years at the rate of 10% per annum.
(a) Find the compound interest for the given information.
(b) At what rate of simple interest with the same sum will produce the same interest in
the same period?
(iii) The compound interest on a certain sum for 2 years at 10% per annum is Rs. 420.
(a) What is the principal? Find it.
(b) What would be the simple interest on the same sum at the rate for the same time ?
Solution:
(i) Given,
CA(annually) = Rs. 784
Principal (P) = Rs. 625
Time (T) = 2 yrs.
(a) Rate of interest (R) = ?
we have,
CA(quarter annually) = P1 + 100
R T
 
or, Rs. 748 = Rs. 6251 + 100
R 2

 
Rs. 784  R 2
or, Rs. 625 = 1 + 100
 
or, 1.2544 = 1 + 100
R 2
 
or, (1.12)2 = 1 + 100
R 2

 
R
∴ 1.12 = 1 + 100
R
or, 100 = 1.12 – 1 = 0.12

∴ R = 12%
(b) Rate of interest (R) = 12%
CA(annually) = Rs. 784
Principal (P) = Rs. 625
Time (T) = 2 yrs.
= P1 + 400 – 1 = Rs. 625 1 + 400 – 1
R 4T 12 4 × 2
∴ CI(quarter annually)
     
= Rs. 625 × 0.2667700814
= Rs. 166.73
(ii) (a) Principal (P) = Rs. 2000
Time (T) = 2 yrs.
Rate of interest (R) = 10% p.a.

10
 = P1 + 100 – 1 = Rs. 2000 1 + 100 – 1
R T 10 2
∴ CI(annually)
     
2
= Rs. 2000[(1.1) – 1] = Rs. 2000 × (1.21 – 1)
= Rs. 2000 × 0.21 = Rs. 420
(b) If P = Rs. 2000, T = 2 yrs, SI = CI = Rs. 420
R=?
we have,
I × 100 Rs. 420 × 100
R = PT = Rs. 2000 × 2 = 10.5%

∴ At 10.5% rate of interest the same sum produce the same interest.
(iii) (a) Time (T) = 2 yrs.
Rate of interest (R) = 10% p.a.
CI(annually) = Rs. 420
Now, we have,
CI(annually) = P1 + 100 – 1
R T
  
or, Rs. 420 = P1 + 100 – 1
10 2

  
or, Rs. 420 = P[(1.1)2 – 1]
or, Rs. 420 = P(0.21)
Rs. 420
∴ P = 0.21 = Rs. 2000
PTR 2000 × 2 × 10
(b) ∴ Simple intrest (SI) = 100 = 100 = Rs. 400.
9. (i) Rs. 16000 is deposited for 2 years at 15% per annum compounded quarter annually.
(a) Which formula is used for finding compound amount as quarter yearly interest?
(b) Find the compound amount for the given information.
(c) Find the compound interest.
3
(ii) Rs. 250000 is deposited for 1 years at 15% per annum compounded quarter annually.
4
(a) Which formula is used for finding compound amount when the time is given in years
and quarter year?
(b) Find the compound amount for the given information.
(c) Find the compound interest.
Solution:
(i) Given,
Principal (P) = Rs. 16,000
Time (T) = 2 yrs.
Rate of interest = 15% p.a.
= P1 + 400
R 4T
(a) CA(quarter annually)
 
= P1 + 400 = Rs. 16,0001 + 400
R 4T 15 4 × 2
(b) CA(quarter annually)
   
8
= Rs. 16,000 (1.0375) = Rs. 16,000 × 1.342470784

11
 = Rs. 21,479.53
(c) CI(quarter annually) = CA(quarter annually) – P = Rs. 21,479.53 – Rs. 16,000
= Rs. 5,479.53
(ii) Principal (P) = Rs. 2,50,000
3 3
Time (T) = 1 4 yrs = 1 yrs + 4 × 12 months = 1 yrs 9 months
Rate of interest (R) = 15%
= P1 + 400 1 + 1200
R 4T mR
(a) CA(quarter annually)
   
= P1 + 400 1 + 1200
R 4T mR
(b) CA(quarter annually)
   
= Rs. 2,50,000 1 + 400
15 × 1 
4 9 × 15
  1 + 1200 
= Rs. 2,50,000(1.0375)4 (1.1125)
= Rs. 2,50,000 × 1.288998587
= Rs. 322249.65
(c) CI(quarter annually) = CA(quarter annually) – P
= Rs. 922249.65 – Rs. 2,50,000
= Rs. 72249.65
10. (i) A man borrowed Rs. 50000 for 2 years under the following terms, 8% per annum CI for
the first year and 10% per annum CI for the second year.
(a) Which formula is used for finding the compound interest when the rates of interest
are different per year ?
(b) Find the compound interest in each year for the given information.
(c) Verify that the sum of compound interest of three years taken in separate is the
compound interest of three years taken at once.
(ii) Sarita deposits Rs. 15000 for 3 years at the rate of 4%, 5% and 6% per annum for the 1st,
2nd and 3rd year respectively.
(a) Which formula is used for finding the compound interest when the rates of interest
are different per year ?
(b) Find the compound interest in each year for the given information.
(c) Verify that the sum of compound interest of three years taken in separate is the
compound interest of three years taken at once.
Solution:
(i) Principal (P) = Rs. 50,000
Time (T) = 2 yrs.
Rate of interest for 1st year (R1) = 8%
Rate of interest for 2nd year (R2) = 10%
= P1 + 100 1 + 100 – 1
R1 R2
(a) CI(annually)
   
= P 1 + 100 1 + 100 – 1
R1 R2
(b) CI(annually)
   
= Rs. 50,000 1 + 100 1 + 100 – 1
8 10
   

12
 = Rs. 50,000[(1.08) (1.1) – 1]
= Rs. 50,000 × 0.188
= Rs. 9,400
(c) Here,
For first year
= P1 1 + 100 – 1 = Rs. 50,000 1 + 100 – 1
R1 8
CI1
     
= Rs. 50,000 × 0.08 = Rs. 4,000
CA1 = P + CI1 = Rs. 00,000 + Rs. 4,000 = Rs. 54,000
For 2nd yrs
P2 = CA1 = Rs. 54,000
R2 = 10% p.a.
= P2 1 + 100 – 1 = Rs. 54,000 1 + 100 – 1
R2 10
∴ CI2
     
= Rs. 54,000 × 0.1 = Rs. 5,400
Now, CI1 + CI2 = Rs. 4,000 + Rs. 5,400 = Rs. 9,400 = CI
Hence, the sum of compound interest of two years taken in separate is the compound
interest of three years at once.
(ii) Given,
Principal (P) = Rs. 15,000
Time (T) = 3 yrs.
Rate of interest for 1st year (R1) = 4% p.a.
Rate of interest for 2nd year (R2) = 5% p.a.
Rate of interest for 3rd year (R3) = 6% p.a.
= P1 + 100 1 + 100 1 + 100 – 1
R1 R2 R3
(a) CI(annually)
    
= P1 + 100 1 + 100 1 + 100 – 1
R1 R2 R3
(b) CI(annually)
    
= Rs. 15,0001 + 100 1 + 100 1 + 100 – 1
4 5 6
    
= Rs. 15,000 [(1.04) (1.05) (1.06) – 1]
= Rs. 15,000 [1.15752 – 1] = Rs. 15,000 × 0.15752
= Rs. 2362.80
(c) For 1st year,
= P11 + 100 – 1 = Rs. 15,000 1 + 100 – 1
R1 4
CI1
     
= Rs. 15,000 (1.04 – 1) = Rs. 15,000 × 0.04 = Rs. 600
CA1 = CI1 + P1 = Rs. 600 + Rs. 15,000 = Rs. 15,600
For 2nd year,
P2 = CA1 = Rs. 15,600
R2 = 5%
= P21 + 100 – 1 = Rs. 15,600 1 + 100 – 1
R2 5
∴ CI2
     
= Rs. 15,600[1.05 – 1] = Rs. 15,600 × 0.05 = Rs. 780
13
 ∴ CA2 = P2 + CI2 = Rs. 15,600 + Rs. 780 = Rs. 16,380
For 3rd year,
P3 = CA2 = Rs. 16,380
R3 = 6%
= P31 + 100 – 1 = Rs. 16,380 1 + 100 – 1
R3 6
∴ CI3
     
= Rs. 16,380 × 0.06 = Rs. 982.80
Here, CI1 + CI2 + CI3 = Rs. 600 + Rs. 780 + Rs. 982.80 = Rs. 2362.80 = CI
Hence, the sum of compound interest of three years taken in separate is the compound
interest of three years taken at once.
11. (i) A sum of money becomes 2 times of itself in 4 years compounded yearly.
(a) Find the rate of compound interest.
(b) At the same rate of compound interest, what will be the amount of Rs. 300000 for
three years ?
(ii) A sum of money becomes 3 times of itself in 5 years compounded yearly.
(a) Find the rate of compound interest.
(b) At the same rate of compound interest, what will be the amount of Rs. 750000 for 4
years ?
Solution:
(i) Let, P = x then ATQ CA(annually) = 2x
Time (T) = 4 yrs.
(a) Rate of interest = ?
we have,
CA(annually) = P1 + 100
R T
 
or, 2x = x1 + 100
R 4

 
or, (21/4)4 = 1 + 100
R 4
 
R
or, 21/4 = 1 + 100
R
or, 1.189207115 = 1 + 100
R
or, 1.189207115 – 1 = 100
R
or, 0.189207115 = 100

∴ R = 18.92% p.a.
(b) Again, R = 18.92% p.a.
T = 3 yrs.
P = Rs. 3,00,000
= P1 + 100 = Rs. 3,00,000 1 + 100 
R T 18.92 3
CA(annually)
   
= Rs. 3,00,000 (1.1892)3 = Rs. 3,00,000 × 1.681762644 = Rs. 504528.79

14
 (ii) Let P = x then CA(annually) = 3x
Time (T) = 5 yrs.
Rate of interest (R) = ?
Here, CA(annually) = P1 + 100
R T
(a)
 
or, 3x = x1 + 100
R 5
 
or, (31/5)5 = 1 + 100
R 5

 
R
or, 31/5 = 1 + 100
R
or, 1.24573094 = 1 + 100
R
or, 1.24573094 – 1 = 100
or, 0.24573094 × 100 = R
∴ R = 24.57%9
(b) Again, P = Rs. 7,50,000
R = 24.45%
T = 4 yrs
∴ CA(annually) = P1 + 100 = Rs. 7,50,0001 + 100 
R T 24.57 4
   
4
= Rs. 7,50,000 (1.2457) = Rs. 7,50,000 × 2.408224685
= Rs. 18,06,168.51
12. (i) A certain sum amounts to Rs. 3380 in 2 years and to Rs. 3515.20 in 3 years at compound
interest.
(a) Find the rate of interest compounded yearly.
(b) Find the sum of money.
(ii) A certain sum of money at compound amount becomes Rs. 7396 in 2 years and Rs.
7950.70 in 3 years.
(a) Find the rate of interest compounded yearly.
(b) Find the sum of money.
Solution:
(i) (a) 1st case
CA1(annually) = Rs. 3380
Time (T1) = 2 yrs.
Principal (P) = x (let)
then, CA1 = P1 + 100
R T1
 
or, Rs. 3380 = x1 + 100
R 2 3380
or, x = 2 ............. (i)
  1 + R 
 100
2nd case
CA2(annually) = Rs. 3515.20

15
 Time (T2) = 3 yrs.
Principal (P) = x
then, CA2 = P1 + 100
R T2
 
Rs. 3515.20 = x1 + 100
R 3 3515.20
or, or, x= ........... (ii)
  1 + R 
3

 100
Equating (i) and (ii) we have,
3380 3515.20
2=
1 +  1 + R 
R 3

 100  100
1 + R 
3

 100 Rs. 3515.20

or, 2 = Rs. 3380
1 + R 
 100
R
or, 1 + 100 = 1.04
R
or, 100 = 1.04 – 1 = 0.04
∴ R = 4%
(b) Putting R = 4% in equation (i) we get,
3380 Rs. 3380
x= 2 = (1.04)2 = Rs. 3125
1 + R
 100
∴ Principal (P) = x = Rs. 3125
(ii) (a) 1st case
CA1(annually) = Rs. 7396
Time (T1) = 2 yrs.
Principal (P) = x (let)
then, CA1 = P1 + 100
R T1
 
or, 7396 = x1 + 100 ............. (i)
R 2
 
2nd case
CA2(annually) = Rs. 7950.70
Time (T2) = 3 yrs.
Principal (P) = x
then, CA2 = P1 + 100
R T2
 
or, Rs. 7950.70 = x1 + 100 ........... (ii)
R 3
 
n
Dividing the eq (ii) by (i), we get
R 7950.70
1 + 100 = 7396

16
 R
or, 100 = 1.075 – 1
or, R= 0.075 × 100 = 7.5%
(b) Putting R = 7.5% in eqn (i) we get,
7396 = x1 + 100
7.5 2
 
or, 7396 = x × 1.155625
7396
or, x = 1.155625 = 6400

∴ Principal (P) = x = Rs. 6400

13. (i) The compound interest on a certain sum for 2 years is Rs. 1025 and for 3 years is Rs.
1576.25.
(a) Find the rate of interest compounded yearly.
(b) Find the sum of money.
(ii) The compound interest calculated yearly on a sum of money for 1 year and 2 years is Rs.
80 and Rs. 168.
(a) Find the rate of interest compounded yearly.
(b) Find the sum of money.
Solution:
(i) Compound interest on 2nd year
CA1 = Rs. 1025
or, P1 + 100 – 1 = 1025
R 2
  
or, P1 + 100 + 1 1 + 100 – 1 = 1025
R R
     
or, P 100  100 = 1025 ......... (i)
200 + R R
  
Compound interest on 3rd year
CA2 = Rs. 1576.25
or, P1 + 100 – 1 = 1025
R 3
  
or, P1 + 100 – 1 1 + 100 + 1 + 100 + 1 = 1576.25
R R 2 R
       
or, P100  10000 + 100  = 1576.25
2
R (100 + R) 200 + R
  
or, P100 
R 10000 + 200R + R + 20000 + 100R
2

  10000  = 1576.25
or, P100 
R R2 + 300R + 30000
  10000  = 1576.25 ........... (ii)
By dividing the eqn (ii) by the eqn (i), we get
R + 300R + 30000 ×  100  = 1576.25
2

 10000  200 + R 1025

2
R + 300R + 30000 1261
or, 20000 + 100R = 820

17
 R2 + 300R + 30000 1261
or, 20(1000 + 5R) = 20 × 41
R2 + 300R + 30000 1261
or, 1000 + 5R = 41
or, 41R2 + 12300R + 1230000 = 1261000 + 6305R
or, 41R2 + 5995R – 31000 = 0
or, 41R2 – 205R + 6200R – 31000 = 0
or, 41R(R –5) + 6200(R – 5) = 0
or, (R –5) (41R + 6200) = 0
Either, R – 5 = 0 => R = 5%
6200
Or, (41R + 6200) = 0 => R = – 41 , Rejected.
From the eqn (i), we get
P 100  100 = 1025
200 + 5 5
  
or, P × 2.05 × 0.05 = 1025
or, P × 0.1025 = 1025
1025
or, P = 0.1025 = 10000
(ii) Given compound interest on a sum of money for two consecutive years are Rs. 80 and Rs. 168.
i.e. CI1 = Rs. 80 and CI2 = Rs. 168
SI for 1st year on CA1 = CI2 – CI1 = Rs. 168 – Rs. 80 = Rs. 88
For last year
P = CI1 = Rs. 80
SI = Rs. 88
T = 1 yr.
SI × 100 Rs 88 × 100
∴ R = PT = Rs 80 × 1 = 110%
Also, for last year
interest = Rs. 88
∴ P1 + 100 – 1 = Rs. 88
R T1
  
or, P1 + 100 – 1 = Rs. 88
110 1

  
or, P[1.11 – 1] = Rs. 88
or, P × 0.11 = Rs. 88
Rs. 88
∴ P = 0.11 = Rs. 800
14. (i) A sum of money is paid back in two annual installments of Rs. 1764 each with adding 5%
compound interest.
(a) How much the total amount is to be paid?
(b) What was the sum borrowed?
(ii) A sum of Rs. 5040 is borrowed at 10% CI compounded yearly and is paid back in two
years in two equal installments.

18
 (a) Calculate the amount of each installment.
(b) How much amount was paid in total ? Find.
Solution:
(i) (a) Amount of money paid in one installment = Rs. 1764
∴ Total amount paid = 2 × Rs. 1764 = Rs. 3528
Rate of interest = 5% p.a.
(b) For 1st year
Principal (P) = x let
Time (T) = 1 year
Rate of Interest = 5% p.a.
∴ CA(annually) = P1 + 100 = x1 + 100 = x × 1.05 = 1.05x
R T 5 1
   
st
Amount paid in 1 installment = Rs. 1764
∴ Principal for 2nd year = CA1 – Amount paid in 1st installment
or, P2 = 1.05x – Rs. 1764
Time (T) = 1 year
Rate of interest = 5% p.a.
∴ CA2 = P21 + 100 = (1.05x – 1764) 1 + 100 = (1.05x – 1764) (1.05)
R 5
   
Amount of 2nd installment = Rs. 1764
In second installment, the debt is cleared,
So, CA2 – Rs. 1764 = 0
or, (1.05x – 1764) (1.05) – Rs. 1764 = 0
or, 1.1025x – Rs. 1852.20 – Rs. 1764 = 0
or, 1.1025x – Rs. 3616.20 = 0
or, 1.1025x = Rs. 3616.20
Rs 3616.20
or, x = 1.1025 = Rs. 3280
Hence, principal = x = Rs. 3280.
(ii) (a) Sum of money (P) = Rs. 5040, Rate of interest for each installment (R) = 10%,
Duration of time (T) = 2 yrs
Now, we have
CA for 1 year (CA1) = P1 + 100 = 50401 + 100 = 5040 × 1.1 = Rs. 5544
R 10
   
st
Suppose, amount for 1 installment = Rs. x. Then,
Pricipal for 2nd installment of 2nd year (P1) = Rs. 5544 – x
Again, amount for 2nd installment (CA2) = P1 + 100 = (5544 – x)1 + 100
R 10
   
= (5544 – x) × 1.1 = 6096.40 – 1.1x
By question,
Amount for 1st installment = Amount for 2nd installment
or, x = 6096.40 – 1.1x
or, x + 1.1x = 6096.40

19
 or, 2.1x = 6096.40
6096.40
or, x = 2.1 = 2904
Hence, the amount of each installment is Rs. 2904.
(b) Total paid amount in two installments = Rs. 2904 × 2 = Rs. 5808.
15. (i) A woman borrowed a certain sum of money at 3% p.a. simple interest and invested it at
5% p.a. compounded interest. After three years she makes a profit of Rs. 1082.
(a) What sum did she borrow ?
(b) What percent of profit did she get?
(ii) A man borrowed a sum of Rs. 500000 at 12% p.a. compounded interest. On the same day,
he lent out this money to a woman at the same rate of compound interest half yearly.
(a) How much money would she have to pay to the man in total ? Find.
(b) What percent of profit did he get after 5 years? Find.
Solution:
(i) (a) Let, the burrowed sum of money = Rs. x, T = 3 yrs
Single amount (SA) at 3% = P1 + 100 = x1 + 100  = 1.09x
TR 3×3
   
Compount amount (CA) at 5% (CA) = P1 + 100 = x1 + 100 = 1.157625x
R T 5 3
   
∴ Profit = CA – SA
or, 1082 = 1.157625x – 1.09x
or, 1082 = 0.067625x
1082
or, x = 0.067625 = Rs. 15970.43
1082
(b) Profit percent = 15970.43 × 100% = 6.78%
(ii) Here, burrowed amount (P) = Rs. 500000, R = 12%, T = 5 yrs.
= P1 + 200 = 5000001 + 200
R 2T 12 2 × 5 10
(a) CAHY
    = 500000 × (0.06)
= 500000 × 1.79084 = Rs. 895423.84
Hence, the woman would have to pay Rs. 895423.84 to the man.
(b) CAY = P1 + 100 = 5000001 + 100 = 500000 × 1.76234 = Rs. 881170.84
R T 12 5
   
CAHY – CAY 895423.84 – 881170.84
∴ Profit% = CAY × 100% = 881170.84 × 100% = 1.62%.
16. (i) A girl wants to deposit Rs. 50,000 in two banks such that they give equal amounts of
compound interest after 2 years. If the bank A gives the interest at 10% p.a. and the bank
B, 12% p.a., find the depositing amounts in both banks.
(ii) Binod lend altogether Rs. 66,000 to Pramod and Santosh for 2 years at 15% compounded
yearly. If Santosh paid Rs. 1935 more than Pramod as the interest, find how much did
Binod lend to each.
Solution:
(i) Sum of money = Rs. 50000
For bank A,

20
 P = Rs. x (suppose), T = 2 yrs, R1 = 10%
CIA = P1 + 100 – 1 = x1 + 100 – 1
R T 10 2
     
= x[(1.1)2 – 1] = x × 0.21 = Rs. 0.21x
For bank B,
P = Rs (50000 – x), T = 2 yrs, R2 = 12%
CIB =P1 + 100 – 1 = (50000 – x) 1 + 100 – 1
R T 12 2
     
= (50000 – x) (1.2544 – 1) = (50000 – x) × 0.2544 = 12720 – 0.2544x
By question,
CIA = CIB
or, 0.21x = 12720 – 0.2544x
or, 0.21x + 0.2544x = 12720
or, 0.4644x = 12720
12720
or, x = 0.4644 = 27390.18

∴ She doposets Rs. 27390.18 in the bank A and 50000 – 27390.18 = Rs. 22609.82 in
the bank B.
(ii) Here, amount with Binod = Rs. 66,000
For Pramod,
P = x (suppose), T = 2 yrs, R = 15%
∴ CIP = x1 + 100 – 1 = 0.3225x
15 T
  
For Santosh,
P = (66000 – x), T = 2 yrs, R = 15%
∴ CIS = (66000 – x) 1 + 100 – 1 = (66000 – x) × 0.3225 = 21285 – 0.3225x
15 2
  
By question,
CIp + 1935 = CIS
or, 0.3225x + 1935 = 21285 – 0.3225x
or, 0.3225x + 0.3225x = 21285 – 1935
or, 0.645x = 19350
19350
or, x = 0.645 = 30000
Hence, Binod lend Rs. 30000 to Pramod and Rs. 66000 – 30000 = Rs. 36000 to Santosh.

21