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Question
Find the compound interest at the rate of 5% per annum for 3 years on that principal which in 3 years at the rate of 5% per annum gives Rs 1200 as simple interest.
Solution
We know that:
\[P = \frac{SI \times 100}{RT}\]
\[ \therefore P = \frac{1200 \times 100}{5 \times 3}\]
\[ = 8, 000\]
Now,
\[A = P \left( 1 + \frac{R}{100} \right)^n \]
\[ = 8, 000 \left( 1 + \frac{5}{100} \right)^3 \]
\[ = 8, 000 \left( 1 . 05 \right)^3 \]
\[ = 9, 261\]
Now,
CI = A - P
\[ = 9, 261 - 8, 000\]
\[ = 1, 261\]
Thus, the required compound interest is Rs 1, 261.
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