Compound Interest 335

Chapter-18

Compound Interest

K KUNDAN
Introduction
You know that, if Principal = Rs P, Rate = R% per
annum and Time = T (in years), then the Simple
Interest (SI) in Rs is given by

SI =
PRT
100
Clearly, compound interest at the end of certain
specified period is equal to the difference between
the amount at the end of the period and the original
principal ie CI = Amount – Principal.

Conversion Period
The fixed interval of time at the end of which the
interest is calculated and added to the principal at
For example, if Principal = Rs 5000 and
rate of interest = 10% per annum, then t he beginning of t he inter v al is called t he
conversion period.
 5000  10  1  In other words, the period at the end of which
SI for 1 year = Rs   = Rs 500
 100  the interest is compounded is called the conversion
period.
 5000  10  2  When the interest is calculated and added to
SI for 2 years = Rs   = Rs 1000
 100  the principal every six months, the conversion
period is six months. Similarly, the conversion
 5000  10  3  period is thr ee mont hs when t he int er est is
SI for 3 years = Rs  
 100  calculated and added quarterly.
= Rs 1500 and so on. Note: If no conversion period is specified, the
Clearly, in computing SI the principal remains conversion period is taken to be one year.
constant throughout. But the above method of
computing interest is generally not used in banks,
Computation of Compound Interest
insurance corporations, post offices and other
money lending and deposit taking companies. They (i) By the method when the interest is
use a different method for computing interest. In calculated and added to the principal
this method, the borrower and the lender agree to every interval
fix up a certain time interval, say a year or a half-
For example, the compound interest on Rs 1000
year or a quarter of a year for the computation of
for 2 years at 4% per annum is Rs 81.60. Let us
interest and amount. At the end of first interval
see. How?
the interest is computed and is added to the original

K KUNDAN
Principal for the first year = Rs 1000
principal. The amount so obtained is taken as the
Interest for the first year
pr incipal for the second inter val of time. The
amount of this principal at the end of the second  1000  4  1 
interval of time is taken as the principal for the = Rs   = Rs 40
 100 
third interval of time and so on. At the end of
certain specified period, the difference between  P  R  T
the amount and the money borrowed ie the original Using : Interest  100 

principal is computed and it is called the compound
Amount at the end of first year
interest (abbreviated as CI) for that period. Thus,
= Rs 1000 + Rs 40 = Rs 1040
we may define the compound interest as follows:
Principal for the second year = Rs 1040
If the borrower and the lender agree to fix up a
Interest for the second year
certain interval of time (say, a year or a half-year
or a quarter of a year etc) so that the amount ( =  1040  4  1 
Principal + Interest) at the end of an interval = Rs   = Rs 41.60
 100 
becomes the principal for the next interval, then
Amount at the end of second year
the total interest over all the intervals calculated
= Rs 1040 + Rs 41.60
in this way is called the compound interest and
= Rs 1081.60
is abbreviated as CI.
336 Concept of Arithmetic

 Compound interest = Rs (1081.60 – Rs 1000) 2

= Rs 81.60  R   R 
= Rs P 1   1  
 100   100 
(ii) By the Formula
3
We have seen in the above example that it takes a  R 
= Rs P 1  
lot of time to find compound interest. Hence, we  100 
explore below a formula for finding compound
interest.  2 
 R 
Let principal be Rs P.  P 1   becomes a common factor 
Rate = R%   100  

K KUNDAN
Time = T years Proceeding in the same manner, amount at the
 Interest for first year end of T years
 P  R 1  PR  T
= Rs   = Rs    R 
 100   100  = Rs P 1  
 100 
 Principal for second year
CI (Compound Interest) for T years
 PR   R 
= Rs P + Rs   = Rs P 1   T
 100   100   R 
= Rs P 1   – Rs P
 Interest for second year  100 

 R    T 
 R 
 P  1  100   R  1  = Rs P 1  100   1
= Rs       
 100 
  Thus, we get the formula for finding the amount
in case of compound interest as
PR  R  Time
= Rs 1    Rate 
100  100  A = P 1  
 100 
 Amount at the end of second year or principal
Now, we solve the above example, by using the
for third year
above formula
 R  PR  R  2
= Rs P 1   + Rs 1    4 
 100  100  100  A = Rs 1000 1  
 100 
 R  R   1000  104  104 
= Rs P 1   1   = Rs   = Rs 1081.60
 100   100   100  100 
2  CI = Rs 1081.60 – Rs 1000 = Rs 81.60
 R 
= Rs P 1  
 100  Computation of Compound Interest when
Interest is Compounded Half-Yearly or
  R  
 P 1  100  becomes a common factor Quarterly

K KUNDAN
   
In compound interest, the time from one specified
Interest for the third year period to the next is known as the conversion
2
period as stated earlier. If time is one year, there
  R   is one conversion period a year. If the time is six
 P  1    R  1
  100   months, there are two conversion periods a year.
= Rs   If t he t ime is t hr ee mont hs, t her e ar e four
100
  conversion periods a year.
 
As stated earlier the rate of interest is usually
quoted as per cent per annum. Thus when the
2
PR  R  interest is calculated :
= Rs 1   ( i ) quarterly, the rate of interest per conversion
100  100 
 Amount at the end of third year 1
period is of the rate stated yearly.
4
2 2
 R  PR  R  ( i i) half-yearly, the interest rate per conversion
= Rs P 1   + Rs 1  
 100  100  100  1
period is of the rate stated yearly.
2
Compound Interest 337

For example, we have to find the compound Computation of Compound Interest, when
1 Time is not an Exact Number of Years
interest on Rs 12000 for 1 years at 16% per
2
annum, interest being compounded (a) quarterly Suppose we have to find Compound Interest (CI)
and (b) half-yearly. We proceed as follows: 1
(a) Principal = Rs 12000 for 2 years on a certain sum at a certain rate per
2
Rate of Interst = 16% per annum
1
16 cent. The Compound Interest for 2 years will be
= = 4% per quarter 2
4

K KUNDAN
equal to the Compound Interest for 2 years at the
1 3  given rate together with Compound Interest for 1
Time = 1 years =   4  = 6 quarters
2 2  1
year at of the given rate. Thus interest for any
T 2
 R  fraction of a year is the same as the interest for
 A = P 1  100 
  full year at the rate equal to the same fraction of
6 the rate.
 4  For example, if we have to find the compound
= Rs 12000 1  
 100 
1
interest on Rs 25000 at 13% per annum for 2
6 2
 104 
= Rs 12000   = Rs 15183.83 years, we proceed as follows:
 100 
Principal = Rs 25000
 CI = Rs 15183.83 – Rs 12000 Rate = 12%
= Rs 3183.83
(b) Principal = Rs 12000 1
Time = 2 years
Rate of Interest = 16% per annum 2
T
 16   R
=   8% per half-year
 2   A = P 1  100 
 
1 3   12 
Time = 1 years =   2  = 3 half-years 12  
2 
2 2  25000

1  1  2 
= Rs  
 100   100 
T  
 R   
 A = P 1  100  1
 
[  Interest for year at 12%
3 2
 8 
= Rs 12000 1    12 
 100    6%]
= Interest for 1 year at 
 2 
12000  108  108  108
= Rs
100  100  100  12 
2
6 

K KUNDAN
 
= Rs 15116.54 = Rs 25000 1  100  1  
100 
   
 CI = Rs 15116.54 – Rs 12000
= Rs 3116.54
 112 112 106 
Thus, if Principal = P, Time = T years and Rate = Rs  25000    
= R% per annum  100 100 100 
(i) Amount (when int erest compounded = Rs 33241.60
quarterly)  CI = Rs 33241.60 – Rs 25000 = Rs 8241.60
4T Thus, let P be the principal and the rate of
 R 
  R 
4T int er est be R% per annum. If t he interest is

 P 1  4   P 1   compounded annualy but time is the fraction of a
 100   400 
  1
(ii) Amount (when interest compounded half- year say 2 years, then amount A is given by
2
yearly)
2T  R 
 R 
R   
2T 2
   R   2  and CI = A – P
 P 1  2   P 1  A = P 1   1 
 100   200   100  

100 

   
338 Concept of Arithmetic

Alternative Method Here, P = Rs 4000,

R1 = 5% per annum and
In this method, we calculate Compound Interest
R2 = 15% per annum.
for the exact number of years by the formula and
 Amount after 2 years
Simple Interest for the remaining time. And this
Simple Interest should be added to the Compound  R1   R 
= P 1   1  2 
Interest.  100   100 
For example, solve the above example.
Principal = Rs 25000  5  15 
= Rs 4000  1   1  
Rate = 12%  100   100 

K KUNDAN
1
Time = 2 years  1  3 
2 = Rs 4000  1   1  
 20   20 
Compound Interest for the first 2 years = A – P
T
21 23
 R  = Rs 4000  
 A = P 1  100  20 20
  = Rs 4830.
2
Thus, the refrigerator will cost Rs 4830 to Ram
  12  Singh.
= Rs 25000 1  100  
   
General Formula for Computing Amount
 25000  112  112  Let P be the principal, the rate of interest be R%
= Rs   = Rs 31360 per annum and time be T years and the interest is
 100  100 
 Compound Interest for the first 2 years compounded after each month.
= Rs 31360 – Rs 25000 = Rs 6360  Interest on Rs 100 for 1 year = Rs R
For the next year, Rs 31360 will be Principal  Interest on Rs 100 for x months

1 R 
= Rs  x
 Interest for next year  12 
2
 Interest on Rs P for x months
 1 
PRT  31360  12   P R  x 
= = Rs  2  = Rs  
100  100   100  12 
  Amount at the end of x months
 
= Rs 1881.60  Rx 
 Total Compound Interst PRx  
= Rs 6360 + Rs 1881.60 = Rs 8241.60 = P = P 1  12 
100  12  100 
 
Computation of Compound Interest, when
Interest is Compounded Annually but This amount is considered as principal for the
next x months.
Being Different for Different Years

K KUNDAN
 According to the above,
Let P be the principal and the rate of interest be Amount at the end of next x months
R1% for the first year, R2% for second year, R3% = Principal for the first x months +
for third year and so on and in the last Rn% for the Interest of the next x months
nth year. Then the amount A and the compound
interest (CI) at the end of the n years is given by  Rx   Rx 
    Rx

= P 1 12   P 1  12  

 R1   R   R 
A = P 1   1  2  .......1  n  and  100   100  100  12
 100   100   100     
   
CI = A – P
For example, Ram Singh bought a refrigerator 2
for Rs 4000 on credit. The rate of interest for the  Rx   Rx   Rx 
    
first year is 5% and of the second year is 15% . P 1  12  1  12   P 1  12 
=
How much will it cost him if he pays the amount  100   100   100 
    
after two years?     
To solve this, we proceed as follows:
Compound Interest 339

Similarly, amount for the next x months (e) If the rate of interest is calculated annually,
then x = 12
3
 Rx 
  12T
= P 1  12   R  12  12
T
 100     R 



  Amount = P 1  12  = P 1  
 100   100 
 
Now,  
12 Thus, we can conclude that the above formula
 Number of x months in 1 year = x

K KUNDAN
is the General Formula and it is very useful in
computing Amount (Principal + Compound Interest)
12T and Compound Interest, whether rate is calculated
 Number of x months in T years =
x quarterly, four-monthly, half-yearly, nine-monthly
etc.
12T For example, to find the Compound Interest on
 Rx  x
  1
 Amount (A) for T years = P 1  12 
 Rs 12000 for 1 years at 12% per annum, interest
 100  4
 
  being compounded five-monthly, we proceed as
follows:
(a) If the rate of interest is calculated quarterly, Here, P = Rs 8000,
then x = 3 R = 12%,
12T 1 5
4T
 R3  3  R  T = 1 = and
    4 4
 Amount = P 1  12
  = P 1 4 

x = 5
 100   100 
   
    12T
 Rx  x
(b) If the rate of interest is calculated half-  
12
yearly, then x = 6  Amount (A) = P 1  100 
2T
 
12T
 R   
 R6  6  
  P 1  2 
 Amount = P 1  12
  =  100   125 
 100      12  5  45 
     
   12 
8000 1  
= Rs   100 

(c) If the rate of interest is calculated nine-    
monthly, then x = 9    
 
12T 4T
 R9  9  3R  3  3
     5  
= Rs 8000 1   

K KUNDAN
P 1  12  P 1  4 
 Amount = =   100  
 100   100 
   
   
 21 21 21 
= Rs 8000   
(d) If the rate of interest is calculated four-  20 20 20 
monthly, then x = 4
= Rs 9261
12T  Compound Interest = Rs 9261– Rs 8000
3T
 R4  4  R  = Rs 1261
   
 Amount = P 1  12  = P 1  3 
 100   100 
   
   
340 Concept of Arithmetic

Solved Examples
Ex. 1: Find the com pound i nt er est on Rs 3
12000 for 3 years at 10% per annum  25 
= Rs 64000 × 1  
compounded annually.  1000 
Soln: We know that the amount A at the end of
T years at the rate of R% per annum when 3
 1 
the interest is compounded annually is = Rs 64000 × 1  
 40 
given by

K KUNDAN T 3
 R   41 
A = P 1   = Rs 64000 ×  
 100   40 
Here, P = Rs 12000, R = 10% per annum 41 41 41
and T = 3 years = Rs 64000 ×  
40 40 40
3 = Rs 68921
 R 
 Amount A after 3 years = P 1   Hence, compound interest payable after 3
 100 
years = Rs 68921 - Rs 64000 = Rs 4921.
3 Ex. 3: Find the compound interest at the rate
 10 
= Rs 12000 × 1   of 10% per annum for four years on
 100  the principal which in four years at the
rate of 4% per annum gives Rs 1600
3
 1  as simple interest.
= Rs 12000 × 1  
 10  Soln: Let Rs P be the principal.
This principal gives Rs 1600 as SI in four
3 years at the rate of 4% per annum.
 11 
= Rs 12000 ×  
 10  SI  100
 P =
RT
11 11 11
= Rs 12000 ×  
10 10 10 1600  100
or, P = Rs = Rs 10000
= Rs (12 × 11 × 11 × 11) 4 4
= Rs 15972 Now, we have P = Rs 100000
Now, R = 10% and T = 4.
Compound Interest = A – P
T
 Compound Interest  R 
 Amount after 4 years = P 1  
= Rs 15972 – Rs 12000  100 
= Rs 3972.
Ex. 2: Vij ay obt ai ns a l oan of Rs 64000 4
 10 
against his fixed deposits. If the rate = Rs 10000 × 1  
 100 
of interest be 2.5 paise per rupee per
annum, calculate the compound interest

K KUNDAN
4
payable after 3 years.  1 
= Rs 10000 × 1  
Soln: Here, P = Rs 64000, T = 3 years, and  10 
R = 2.5 paise per rupee per annum
4
= (2.5 × 100) paise per hundred rupees  11 
per annum = Rs 10000 ×  
 10 
 2.5  100 
= Rs   per hundred rupees 11 11 11 11
  
 100  = Rs 10000 ×
10 10 10 10
per annum
= Rs 14641.
= 2.5% per annum.
 Compound interest
 R 
3 = Rs 14641 – Rs 10000
 Amount A after 3 years = P 1   = Rs 4641.
 100  Ex. 4: Compute the compound interest on Rs
3 12000 for 2 years at 20% per annum
 2.5  when compounded half-yearly.
= Rs 64000 × 1  
 100  Soln: Here, Principal P = Rs 12000,
Compound Interest 341

Rate = R = 20% per annum Soln: Here, Principal = P = Rs 320000

Rate = R = 20% per annum
20
= = 10% per half-year 20
2
= = 5% per quarters
T = 2 years = 2 × 2 = 4 half-years 4
T
T = 1 year = 1 × 4 = 4 quarters
 R 
 A = P 1  100   R 
T
  Amount (A) after 1 year = P 1  
 100 
 4
10  

K KUNDAN

= Rs 12000 1  100     5  
4
     320000 1   
= Rs 100  
 
 4
 1  
= Rs 12000 1  10     1  
4
     320000 1   
= Rs 20  
 
 4
 11  
= Rs 12000   10    4
 21  
     320000   
= Rs
  20  
 11 11 11 11 
= Rs 12000    
 10 10 10 10   320000  21  21  21  21 
= Rs  
 20  20  20  20 
14641
= Rs 12000  = Rs 388962
10000  Compound interest
= Rs 17569.20 = Rs 388962 – Rs 320000 = Rs 68962.
 Compound interest Alternative Method:
= Rs 17569.20 – Rs 12000
= Rs 5569.20 12T
 Rx  x
Alternative Method:  
We can solve this question by General Amount (A) for T years = P 1  12 
Formula also.  100 
 
 
12T
 Rx  x Here,
  P = Rs 320000
Amount (A) for T years = P 1  12 
 100  R = 20% per annum
  T = 1 year and
 
x = 3
Here,
P = Rs 12000  121 
R = 20% per annum   20  3  3 

K KUNDAN
   
T = 2 years and = Rs 320000 1  12
  
x = 6   100  
 
   
 122   
  20  6  6 
    4
= Rs 12000 1  12  
  5  
 100  = Rs 320000 1   
     100  
    
  Now, do as the above.
Ex. 6: What sum of m oney at com pound
 4
 1   interest will amount to Rs 2249.52 in 3
= Rs 12000 1    years, if the rate of interest is 3% for
  10  
the first year, 4% for the second year
Now, do as the above. and 5% for the third year?
Ex. 5: Find the com pound i nt er est on Rs Soln: The general formula for such question is:
320000 for one year at the rate of 20%
 R1   R  R   R 
per annum . I f t he i nt er est i s A= P 1   1  2  1  3  ... 1  n 
compounded quarterly.  100   100   100   100 
342 Concept of Arithmetic

Where A = Amount, P = Principal and R1,  Compound interest

R2, R3, ...., Rn are the rates of interest for = Rs (133.10 - 100) = Rs 33.10
different years. Now,
In the above case, If compound interest is Rs 33.10, principal
= Rs 100
 3  4  5 
2249.52 = P 1   1   1   If compound interest is Re 1, principal =
 100   100   100 
100
2249.52 = P (1.03) (1.04) (1.05) Rs
33.10
2249 .52
If compound interest is Rs 331, principal

K KUNDAN
 P = (1.03)  (1.04 )  (1.05 ) = Rs 2000
 100 
Ex. 7: Find the com pound i nt er est on Rs = Rs   331  = Rs 1000
 33.10 
1 Hence, principal = Rs 1000.
24000 at 15% per annum for 2
3 Alternative Method:
years. Rate = 10% per annum
Soln: Here, P = Rs 24000 Time = 3 years
R = 15% per annum and Amount = Rs 331
1 T
 R 
Time = 2 years.  A = P 1  
3  100 
1
 Amount after 2 3 years A 331
 P = T
 3
 R   10 
1   1  
 1   100   100 
R 
R  
2
 3
= P 1    1  
 331  10  10  10 
 100   100  =   = Rs 1000
   11  11  11 
 
Ex. 9: What sum will become Rs 9826 in 18
 1  months if the rate of interest is 5%
 15 
15  
2 per annum and t he i nt er est i s

= Rs 24000 1    1  3  compounded half-yearly?
 100   100 
  Soln: Let the required sum ie the principal, be
 
Rs P.
We have,
 2
 3   1  Principal = Rs P,
= Rs 24000 1    1  
  20   20   Amount = Rs 9826,
R = 5% per annum
 2
 23   21   5
% per half-year and
= Rs 24000      =
  20   20   2

K KUNDAN
= Rs 33327 18 3
T = 18 months = years = years.
 Compound interest = Rs (33327 – 24000) 12 2
= Rs 9327.
Ex. 8: Find the principal, if the compound 3 
=   2   3 half-years
interest compounded annually at the 2 
rate of 10% per annum for three years T
is Rs 331.  R 
 A = P 1  
Soln: Let the principal be Rs 100. Then,  100 
Amount after three years
3
 5 
 3  
 10  
= Rs 100  1  100   or, 9826 = P 1  2 
     200 
 
 
 3
 11  
= Rs 100   100    1 
3
    or, 9826 = P 1  
 80 
= Rs 133.10.
Compound Interest 343

3 T
 81  882  21 
or, 9826 = P   or,  
 80  800  20 

3 2
 80  441  21 
or, P = 9826 ×   = 9466.54 or,  
 81  400  20 
Hence, required sum = Rs 9466.54. T 2
Alternative Method:  21   21 
or,    
Let the required sum be Rs 100. Then,  20   20 

K KUNDAN 3  T = 2.
the amount after 18 months ie years at Hence, required time is 2 years.
2
Ex. 11: In what time will Rs 64000 amount to
the rate of 5% compounded half-yearly, is
Rs 68921 at 5% per annum, interest
given by
being compounded half-yearly?
3 Soln: Here, Principal (P) = Rs 64000
 2 
  5  2 Amount (A) = Rs 68921
    Rate (R) = 5% per annum.
Amount = Rs 100  1  2  
  200   5
  = % per half-year
    2
 
Let the time be T years = 2T half-years
 3 Therefore,
 81  
= Rs 100     T
  80    R 
A = P 1  
 100 
531441
= Rs 2T
5120  5 
Now,  
68921  64000 1  2 
531441  100 
 
If amount is Rs ,  
5120
then principal = Rs 100 2T
If the amount is Re 1, then principal 68921  1 
or,  1  
64000  40 
 100  5120 
= Rs  
 531441   41 
3
 41 
2T

If the amount is Rs 9826, then principal or,    

 40   40 
 100  5120  or, 2T = 3
= Rs   9826  = Rs 9466.54
 531441  3 1
years = 1

K KUNDAN
Hence, required sum = Rs 9466.54.  T = years.
2 2
Ex. 10: In what time Rs 800 amount to Rs 882
Ex. 12: At what r ate per cent per annum
at 5% per annum compounded
compound i nt er est wil l Rs 10000
annually?
amount to Rs 13310 in three years?
Soln: Here, Amount (A) = Rs 882,
Soln: Let the rate be R% per annum.
Principal (P) = Rs 800 and
We have, P = Principal = Rs 10000,
Rate (R) = 5% per annum.
A = Amount = Rs 13310 and
T T = 3 years.
 R 
 A = P 1  
 100   R 
T
 A = P 1  100 
T  
 5 
or, 882 = 800 1  
 100   R 
3
or, 13310  10000 1  
T  100 
882  1 
or,  1  
800  20  13310  R 
3
or,  1  
10000  100 
344 Concept of Arithmetic

1331  R 
3 11 R
 1   or,  1
or, 10 200
1000  100 

3
R 11 1
113  R  or,  1 
or,  1   200 10 10
10 3  100 
200
R 11  R = = 20%
or, 1   10
100 10
Hence, the rate of interest

K KUNDAN
R 11 = 20% per annum.
or,  1 Ex. 14: Determine the rate of interest for a sum
100 10
216
R 1 that becomes times of itself in 3
or,  125
100 10
years, compounded annually.
100 Soln: Let the principal be Rs P and the rate of
or, R = = 10 interest be R% per annum compounded
10
annually.
Hence, rate = 10% per annum.
It is given that the amount at the end of 3
Ex. 13: Nikhil invested Rs 6000 in a company
at com pound i nter est compounded 216
semi-annual ly. He recei ves Rs 7986 years must become P. Therefore,
125
after 18 months from the company.
Find the rate of interest per annum. 3
216  R 
Soln: We have, P = Principal = Rs 6000 P  P 1  
125  100 
A = Amount = Rs 7986 and
 T
3  R  
T = 18 months = years. Using A  P 1   
2   100  

3 
=   2   3 half-years 216  R 
3
2  or,  1  
Let the rate of interest be R% per annum 125  100 

R 3 3
= % per half-year. 6  R 
2 or,    1  
5  100 
(Since the interest is compounded semi-
annually) 6 R
or,  1
T 5 100
  R
 A = P 1  100  R 6
  or,  1
100 5

K KUNDAN
3
 R  R 1
  
or, 7986  6000 1  2  or,
100 5
 100 
  or, R = 20
 
Hence, the rate of interest is 20% per
3 annum.
 R 
or, 7986  6000 1   Ex. 15: The difference between the compound
 200  interest and simple interest on a certain
3 sum of money at 10% per annum for 2
7986  R 
or,  1   years is Rs 500. Find the sum when
6000  200  the interest is compounded annually.
3 Soln: Let the sum be Rs 100.
1331  R 
or,  1   Computation of compound interest: We
1000  200  have, Principal = Rs 100,
3 3 R = 10% per annum, and
 11   R  T = 2.
or,    1  
 10   200 
Compound Interest 345

 2 15
 10    R 
Amount = Rs 100  1  100   or, 2  1   ....(i)
     100 

 2 Putting A  2P and T  15 in 
 11   
= Rs 100   10   = Rs 121. T
     R  
  A  P 1  
  100  
 CI = Rs 121 – Rs 100 = Rs 21.
Computation of simple interest : We have, Suppose the money becomes 8 times ie
Principal = Rs 100, R = 10% and 8P in T years. Then,

K KUNDAN
Time = 2 years. T
 R 
 100  10  2  8P  P 1  
 SI = Rs   = Rs 20.  100 
 100 
T
Thus, Difference in CI and SI  R 
or, 8  1  
= Rs (21 – 20) = Re 1  100 
Now, T
 If difference between CI and SI is Re 1, 3  R 
or, 2  1  
Sum = Rs 100  100 
 If difference between CI and SI is Rs 3
 15 T
500, Sum = Rs (100 × 500) = Rs 50000. R    R 
Alternative Method: or, 1     1  
 100    100 
Let the sum be Rs P.
[Using (i)]
PRT 45 T
Simple Interest =  R   R 
100 or, 1    1  
 100   100 
 P  10  2  P  or, T = 45
=  = Rs   Hence, the money will become 8 times in
 100  5
45 years.
Compound Interest = Amount – Principal Ex. 17: A farmer wants to divide Rs 390300
 2  between his two daughters who are 16
  10   years and 18 years old respectively in
= Rs  P  1  100   P 
    such a way that the sum invested at
the rate of 4% per annum, compounded
 2 
  11   annually will give the same amount to
= Rs  P   10   P  each, when they attain the age of 21
   
years. How should he divide the sum?
 P  11  11  Soln: Suppose the farmer gives Rs P to 16 years
= Rs   P
 10  10  old daughter and the remaining Rs
(390300 – P) to 18 years old daughter.
 21P  At the age of 21 years, each daughter gets
= Rs  

K KUNDAN
 100  the same amount. This means that the
amount of Rs P invested for 5 years is
Now, according to the question,
same as the amount of Rs (390300 – P)
21P P invested for 3 years ie
 = Rs 500
100 5 5 3
 4   4 
P 1    390300  P  1  
21P - 20P  100   100 
or, = Rs 500 2
100  4 
or, P 1    390300  P 
 P = Rs (500 × 100) = Rs 50000  100 
Ex. 16: A sum of money doubl es i t sel f at
2
compound interest in 15 years. In how  1 
or, P 1    390300  P 
many years will it become eight times?  25 
Soln: Let the sum of money be Rs P invested at
2
the rate of R% per annum. It is given that  26 
or, P    390300  P 
the money doubles itself in 15 year s.  25 
Therefore,
 26  2 
15
 R  or, P  25   1  390300
2P  P 1     
 100 
346 Concept of Arithmetic

 676  625  2
 R 
or, P    390300 9680  P 1   ...(i) and
 625   100 
1301  3
or, P    390300  R 
 625  10648  P 1   ...(ii)
 100 
390300  625
or, P = = 187500 Now, dividing equation (ii) by equation (i),
1301 we have
Therefore, the daughter aged 16 years gets 3
Rs 187500 and the daughter aged 18 years  R 
P 1  

K KUNDAN
gets Rs (390300 – 187500) = Rs 202800. 10648  100 
 2
Alternative Method: 9680  R 
Let the equal amount in each case be Rs P 1  
 100 
100 and P1, P2 be the principals for the
two daughters. 10648 R
or,  1
In case of the first daughter, 9680 100
A = Rs 100, T = 5 years, R = 4%
5 5 R 10648
 4   26  or,  1
 100  P1 1    P1   100 9680
 100   25 
R 968
100 100  (25 )5 or, 
or, P1   100 9680
5
 26  (26)5
  968
 25  or, R =  100 = 10
9680
In case of the second daughter,
A = Rs 100, T = 3 years, R = 5% R 
2

3
Putting R = 10 in 9680  P 1   , we
 5   100 
 100  P2 1  
 100  get
2
 10 
100
3 9680  P 1  
 25   100 
or, P2  3
 100  
 26   26 
  2
 1 
 25  or, 9680  P 1  
 10 
 Ratio between their parts is
2
3  11 
100  (25)5  25  or, 9680  P  
P1 : P2 = : 100 
(26)5  26   10 
2
 10 
 25 
2 or, P = 9680   
=   :1  11 
 26 
100
or, P = 9680 

K KUNDAN
= 252 : 262 = 625 : 676 = 8000
121
 We shall divide Rs 390300 in the ratio
of 625 : 676 Hence, principal = Rs 8000 and rate of
 Daughter aged 16 years old gets interest = 10% per annum.
Ex. 19: A sum of money is put at compound
 390300 
Rs   625  interest for 2 years at 20% per annum.
 625  676  I t would fet ch Rs 482 m or e, if the
390300  625 interest were payable half-yearly than
= Rs = Rs 187500
1301 if it were payable yearly. Find the sum.
and the daughter aged 18 years old gets Soln: Let t he r equired sum of money be
= Rs (390300 – 187500) = Rs 202800. Rs P.
Ex. 18: A sum amounts to Rs 9680 in 2 years Case I: When interest is payable yearly.
and to Rs 10648 in 3 years compounded In this case, let the amount be A1. Then,
annually. Find the sum (principal) and
2 2
the rate of interest per annum.  20  6 36P
A1  P 1    P  
Soln: Let the sum (principal) be Rs P and the  100  5 25P
rate of interest be R% per annum. Then,
Case II: When interest is payable half-
yearly.
Compound Interest 347

In this case, Principal = P,

 2 
R = 20% per annum R 
or, 110  P 1  100   1 and PR = 5000
20   
= = 10% per half-year
2
 2R R2 
T = 2 years = 2 × 2 = 4 half-years or, 110  P 1  100  10000  1 and
Let A2 be the amount at the end of 2 years.  
Th en , PR = 5000
T
 R  2PR PR 2

K KUNDAN
A 2  P 1   or, 110   and PR = 5000
 100  100 10000

 10 
4 PR PR
or, A 2  P 1   or, 110    R and PR = 5000
 100  50 10000

4 5000 5000
 11  or, 110   R
or, A 2  P   50 10000
 10  [Putting PR = 5000]
It is given that A2 – A1= 482 R
or, 110 = 100 +
 11 
4
6
2 2
or, P    P    482
 10  5 R
or, 10 =
2
 11  4 2
6 or, R = 20.
or, P  10    5    482
Putting R = 20 in PR = 5000, we get 20P
    
= 5000
4 2  P = 250.
 11   12  Hence, principal = Rs 250 and rate
or, P  10    10    482
     = 20% per annum.
Alternative Method:
  11  2 12    11 2 12   Difference between Compound Interest
      482 and Simple Interest
or, P   10   10   
  10  10  
    = Rs 110 – Rs 100 = Rs 10
 Simple Interest for 2 years = Rs 100
 241   1 
or, P     482 100
 100   100   Simple Interest for 1 year = Rs
2
482  100  100 = Rs 50
 P = = 20000 Because inter est is r eckoned year ly
241
Compound Int erest and t he Simple
Hence, the sum of money was Rs 20000.
Interest for the first year will be the same.
Ex. 20: Reena borrowed from Kamal certain
 Rs 10 is the interest on Rs 50 for 1

K KUNDAN
sum for two years at simple interest.
year.
Reena lent this sum to Hamid at the
 Principal = Rs 50, T = 1 year and
same rate for two years at compound
SI = Rs 10
interest. At the end of two years she
received Rs 110 as compound interest SI  100 10  100
but paid Rs 100 as simple interest. Find  Rate = PT =
50  1
the sum and rate of interest.
Soln: Let the principal be Rs P and the rate of = 20% per annum
interest be R% per annum. Now, SI = Rs 100, R = 20% and
We have, CI = Rs 110, SI = Rs 100 and T = 2 years
Time = 2 years. SI  100  100  100 
2  P = RT =   = Rs 250
 R   20  2 
 110  P 1    P and
 100  Hence, principal = Rs 250 and
PR2 rate = 20% per annum.
100  Ex. 21: The simple interest on a sum at 4% per
100
annum for 2 years is Rs 80. Find the
 2  compound interest on the same sum for
R  PR
or, 110  P 1    1 and 100  the same period.
 100   50
348 Concept of Arithmetic

Soln: Let the sum be Rs P. 43 3

 R  5 125
PRT Now, 1     
SI =  100  4 64
100
12
SI  100 80  100  R  125  75 9375
or, 1    
 P = RT = = Rs 1000  100  64  75 4800
2 4
T 12
 R   R 
CI = P 1   P or, 4800 1    9375
 100   100 

K KUNDAN
 2  The above equation shows that Rs 4800
 4 
= Rs 1000 1  100   1000  becomes Rs 9375 after 12 years.
    Ex. 24: Find the present value of Rs 40960 due
2
 1000  26  26  3 year s hence at 6 % per annum
= Rs   1000  3
 25  25 
compound interest.
  676  3
= Rs 1000  1  20 
  625  Soln: Present value 1   = Rs 40960
 3  100 
1000  51
= Rs = Rs 81.6 40960
625  Present value = Rs 3
Ex. 22: The compound interest on a certain sum  20 
1  
of money for 2 years at 10% per annum  3  100 
is Rs 420. Find the simple interest at
the same rate and for the same time.  15 15 15 
= Rs  40960    
Soln: Let the sum be Rs P.  16 16 16 
T = Rs 33750
  R
 CI = P 1  100   P Ex. 25: What annual payment will discharge a
  debt of Rs 8116 due in 3 years at 8%
per annum compound interest?
2
 10  Soln: Let Rs x be the amount of each instalment.
or, 420  P 1   P
 100  Then the instalments of Rs x are paid at
the end of 1 year, 2 years and 3 years
 11  11  respectively.
or, 420  P  P
Present values of these instalments are
 10  10 

21    





 
or, 420  P
 x   x   x 
100  
2 and  3 
 8 , 8   8 
 1   1   
420  100  100     
100    1  100  
 P = = Rs 2000   
21  Total present value of these instalments

K KUNDAN
PRT  25 625 15625   50725x 
 Simple Interest = = Rs x     = Rs  19683 
100  27 729 19683   
Also, present value of Rs 8116 due 3 years
 2000  10  2 
= Rs   hence
 100 
= Rs 400  
 
Ex. 23: Rs 4800 becomes Rs 6000 in 4 years  8116 
at a certain rate of compound interest.  3 
= Rs   8  
What will be the sum after 12 years?
 1  100  
Soln: Let the rate of interest be R%.   
Now, we have
 8116  15625 
R 
4 = Rs  
  19683 
4800 1    6000
 100  50725x 8116  15625
 =
4 19683 19683
 R  6000 5
or, 1      x = Rs 2500
 100  4800 4
Compound Interest
Practice Exercise
1. Abhay lent Rs 8000 to his friend for 3 years at
the rate of 5% per annum compound interest.
What amount does Abhay get after 3 years?
2. Find the compound interest on Rs 1000 at
the rate of 10% per annum for 18 months
when interest is compounded half-yearly.
K KUNDAN
3. What will be compound interest of Rs 24000
1 annually. The amount which A gets at the
for 2 years at the rate of 15% per annum?
3
4. Ramesh deposited Rs 7500 in a bank which
pays him 12% int er est per annum
compounded quarterly. What is the amount
which he receives after 9 months?
5. At what rate per cent per annum of compound
interest will Rs 1600 amount to Rs 1852.20
in 3 years?
6. Find the sum of money which will amount to
Rs 26010 in 6 months at the rate of 8% per
annum when the interest is compounded
quarterly.
7. Govardhan deposited Rs 7500 in a bank for 6
months at the rate of 8% per annum, interest
compounded quarterly. Find the amount he
received after 6 months.
8. A certain sum invested at 4% per annum
compounded semi-annually amounts to Rs
7803 at the end of one-year. Find the sum.
9. Rs 16000 inv ested at 10% per annum
compounded semi-annually amounts to Rs
18522. Find the time period of investment.
10. The dif f erence in simple and compound
interest on a certain sum for 2 years at 5%
per annum compounded annually is Rs 75.
Find the sum.
11. The simple interest on a sum of money at
some rat e for 3 years is Rs 225 and t he
compound interest on the same sum of money
and at the same rate for 2 years is Rs 153.
K KUNDAN
Find the sum and the rate per cent per annum.
12. A principal sum of money is lent out at
compound interest compounded annually at
the rate of 20% per annum for 2 years. It
would give Rs 2410 more if the interest is
compounded half-yearly. Find the principal
sum.
13. A money-lender borrows a certain sum of
money at 3% per annum simple interest and
lends it at 6% per annum compound interest
compounded half-yearly. If he gains Rs 618
in a year, find the sum of money borrowed by
him.
14. The compound interest on a certain sum of
money for 2 years at 5% per annum is Rs
102.50. What will be the compound interest
on the same sum of money for the same period
at 4% per annum.
349
15. Two partners A and B together lend Rs 2523
at 5% compound int er est compounded
annually. The amount A gets at the end of 3
years is the same as B gets at the end of 5
years. Determine the share of each.
16. Two partners A and B together lends Rs 84100
at 5% compound int er est compounded
end of 3 years is the same as what B gets at
the end of 5 years. Determine the ratio of the
shares of A and B.
17. A sum of money put at compound interest
amounts to Rs 8820 in two years and to Rs
9261 in three years. Find the sum and the
annual rate of interest.
18. Find the present value of Rs 4913 due 3 years
1
hence at 6 % per annum compound interest.
4
19. A person borrowed Rs 4000 at 5% per annum
compound interest compounded annually.
After 2 years, he repaid Rs 2210 and then
after 2 more years, he repaid the balance with
interest. Find the total interest paid by him.
2 0 . A sum of money lent out at compound interest
increases in value by 50% in 5 years. A person
wants to lend three different sums of money
X, Y and Z for 10, 15 and 20 years respectively
at the above rate in such a way that he gets
back equal sums of money at the end of their
respective periods. Find the value of X : Y : Z.
21. A person closes his account in a bank by
withdrawing Rs 110000. One year earlier,
he had withdr awn Rs 65000. Two year s
earlier, he had withdrawn Rs 125000. How
much money had he deposited in the bank at
the time of opening the account three years
ago if t he annual interest r at e was 10%
compounded annually?
2 2 . Compound interest and simple interest on a
certain sum for 2 years are Rs 104 and Rs
100 respectively. Find the rate per cent and
the principal.
23. The difference between compound and simple
interests on a certain sum of money at the
1
interest rate of 10% per annum for 1 years
2
is Rs 183, when the interest is compounded
semi-annually. Find the sum of money.
24. In how many years will a sum of Rs 800 at
10% per annum compound inter est ,
compounded semi-annually, becomes Rs
926.10.
25. If the difference between compound interest,
compounded half-yearly and simple interest
on a sum of money at 8% per annum for 1
year is Rs 30. Find the sum.
350 Concept of Arithmetic

Answers and explanations

1. Here, P = Rs 8000, R = 5% per annum and R 3. Here, Principal (P) = Rs 24000
= 3 years. Rate (R) = 15%

 R 
3 1
 Amount after 3 years = P 1   Time (T) = 2 years
 100  3

3  R 

K KUNDAN
 5 
R   
2
= Rs 8000  1    3 
 100  A = P 1   1 
 100   100 
 
3  
1 
= Rs 8000  1  
 20 
 15 
15   
2

 21 
3
= 24000 1   1 3 
= Rs 8000     100   100 
 20   
 
21 21 21
= Rs 8000    = Rs 9261. 2
 23   21 
20 20 20 = 24000     
Thus, Abhay gets Rs 9261 at the end of 3  20   20 
years.
23 23 21
2. Here, P = Rs 1000, = 24000    = Rs 33327
R = 10% per annum 20 20 20
 Compound Interest = Rs 33327 – Rs 24000
10
= % = 5% per half-year = Rs 9327
2 Alternative Method:
Principal (P) = Rs 24000
 18  3
T = 18 months =   years Rate (R) = 15%
 12  2
1
Time (T) = 2 years
3  3
=   2   3 half-years Compound Interest for the first 2 years
 2 
= Amount – Principal
Now, from the formula
T
T  R 
 R   A = P 1  
A = P 1    100 
 100 
 2
 3
5    15  
 = Rs 24000 1   
= Rs 1000 1      100  

K KUNDAN
  100   

 3  24000  23  23 
 1   = Rs   = Rs 31740
= Rs 1000 1     20  20 
  20  
 Compound Interest for the first 2 years
3 = Rs 31740 – Rs 24000 = Rs 7740
  21  
= Rs 1000    For the next year Rs 31740 will be principal

  20   1
 Interest for next years
3
 1000  21  21  21 
= Rs  
 20  20  20  PRT  31740  15  1 
= = Rs   = Rs 1587
= Rs 1157.625 100  3  100 
Hence,  Total Compound Interest
Compound Interest = Amount – Principal = Rs 7740 + Rs 1587
= Rs 1157.625 – Rs 1000 = Rs 9327
= Rs 157.625
Compound Interest 351

4. Here, Principal = Rs 7500

Rate = 12% per annum  
 
 12  A  26010 
=    3% per quarter and  P = T
= Rs  2
 4   R   1  2  
1  
 9  3  100    100  
Time = 9 months =   year
 12  4
3   26010  50  50 
=   4   3 quarters = Rs   = Rs 25000
 51  51 
4 

K KUNDAN T 7. Principal (P) = Rs 7500

 R 
A = P 1  
 100   6 1
Time (T) = 6 months =   year
Amount after 9 months  12  2

3
  3   =  1  4   2 quarters
 
= Rs 7500 1  100   2 
   
Rate (R) = 8% per annum
7500  103  103  103
= Rs 8 
100  100  100 =    2% per quarter
4 
= Rs 8195.45
5. Let the rate be R% per annum. T
We have  R 
 Amount = P 1  
Principal (P) = Rs 1600  100 
Amount (A) = Rs 1852.20 and
Time (T) = 3 years  2
 2  
 
T = Rs 7500 1  100  
 R     
 A = P 1  
 100 
 2
3  51  
R   

or, 1852.20 = 1600 1   = Rs 7500   50  
100     

3
 R  1852.20  7500  51  51 
or, 1   = = 1.157625 = (1.05)3 = Rs   = Rs 7803
 100  1600  50  50 
R 8. A = Rs 7803
or, 1  = 1.05 R = 4% per annum
100
R 4 
or, = (1.05 – 1) = 0.05 =    2% per half-year
2 

K KUNDAN
100
T = 1 year = (1 × 2 =) 2 half-years
 R = 0.05 × 100 = 5%
(Since t he interest is compounded semi-
6. Here, Amount (A) = Rs 26010
annually)
Rate (R) = 8% per annum
T
8   R 
=    2% per quarter  A = P 1  
4   100 
 6 1  
Time (T) = 6 months =   year  
 12  2 A  7803 
 P = T
= Rs  2
 R   1  2  
=  1  4   2 quarters 1  
 
 100  100  
2 
Now,
 7803  50  50 
T = Rs   = Rs 7500
 R   51  51 
 A = P 1   ;
 100  Thus, the sum invested is Rs 7500.
where P = Principal or required sum
352 Concept of Arithmetic

9. We have, Principal (P) = Rs 16000

41x x
Amount (A) = Rs 18522 Difference in CI and SI = 
Rate (R) = 10% per annum 400 10

41x  40 x x
=  10   5% per half-year = 
 2  400 400
But it is given that the difference of CI and SI
Let the time be T years = (2 × T) half-years
is Rs 75.
Now,
T
x
 R    75

K KUNDAN
 A = P 1   400
 100  or, x = 75 × 400 = Rs 30000.
 The sum is Rs 30000.
2T
 5  11.  Simple interest for 3 years is Rs 225
or, 18522  16000 1  
 100  225
 Simple interest for 1 year is = Rs 75
2T
3
18522  21 
or,   225
16000  20   Simple interest for 2 years is 2
3
2T = Rs 150
9261  21 
or,   and, compound interest for 2 years is Rs 153.
8000  20 
Difference between compound interest and
3 2T simple interest for 2 years = 153 – 150 = Rs 3.
 21   21  As we know t hat, diff er ence bet ween
or,    
 20   20  compound interest and simple interest for 2
or, 2T = 3 years = Interest on simple interest for 1 year.
Let the rate of interest be R%.
3 1
 T = = 1 years 75  R
2 2 Then,  3 or R = 4%
100
Therefore, time period of investment is one-
and-a-half year. PR P4
10. Let the sum be Rs x and  75 or  75
100 100
Simple interest on Rs x for 2 years at 5%
75  100
x  2 5 x or, P = = Rs 1875
= = Rs 4
100 10
Sum = Rs 1875 and rate per cent = 4% per
 Time  annum.
Rate 
 Compound Interest = P 1    1 12. Let the sum be Rs P.
 100    Compound interest when it is compounded
annually,
 Compound interest on Rs x for 2 years at

K KUNDAN
5% 20 
2

= P 1   P
 5 
2   100 
 
= x 1  100   1 Compound interest when it is compounded
   half-yearly,
22
 21 2   20 
   
= x  20   1 2 
   = P 1  P
 100 
 
 
 441  4
= x 1  10 
 400  = P 1   P
 100 
x  441  400  Now, according to the question, we have
=
400
  4    2 
10  20 
41x P 1    P   P 1    P  = 2410
=   100     100  
400    
Compound Interest 353

4 2
  10609  
or, P 1  10   P 1  20  = 2410 = Rs P    1
 100   100    10000  

 4 2 609P
10   20   = Rs
or, P 1    1    = 2410 10000
 100   100  
 Now, according to the question,

 11  4  12 2 
or, P      = 2410  609P 3P 

K KUNDAN
 10   10      = Rs 618
  10000 100 

 2
2 2  609P - 300P 
  11   12   or,   = Rs 618
or, P         = 2410  10000 
10   10  
    or, 309P = Rs (618 × 10000)
 P = Rs 20000
  11 2 12   11 2 12  14. Let the principal be Rs P. Then,
     
or, P          = 2410 Compound Interest
  10  10   10  10 
   2
 5 
= Rs P 1   P
   100 
or, P  121  12   121  12   = 2410
  100 10   100 10   2
 21 
= Rs P   P
 241 1   20 
or, P    = 2410
 100 100  2
 441 
= Rs P   P
2410  100  100  400 
or, P = = 100000
241
Hence, the required sum = Rs 100000 41P
= Rs
13. Let the required sum of money be Rs P. 400
Now, according to the question,
PRT
Case I: Simple Interest = 41P
100
= Rs 102.50
400
 P  3  1  3P 
= Rs   = Rs  
 102.50  400 
 100   100  or, P = Rs   = Rs 1000
Case II: Compound Interest  41 
= Amount – Principal Now,

K KUNDAN
T 2
 R   4  
= P 1   P Compound Interest = Rs 1000 1    1
 100   100  
 
Here, R = 6% per annum

6   26  2 
=    3% per half-year = Rs 1000    1
2   25 



T = 1 year = 2 half-years
(Since the interest is compounded half-yearly)  676 
= Rs 1000   1
 Compound Interest  625 
  2 
3   676 - 625 
= Rs P 1    P = Rs 1000  
  100    625 
 

  103 2  51
= Rs 1000 
= Rs P    P 625
  100  
  = Rs 81.60
354 Concept of Arithmetic

15. Let the share of A be Rs x and share of B be

5
Rs (2523 – x).  21 
According to the question,  
x 20 
Amount received by A after 3 years at 5% or,  
y  21 3
interest  
3 3
 20 
 5   21 
 x 1    x 
100  2
  20  x  21  441
or,   
Similarly, amount received by B after 5 years y  20  400

K KUNDAN  5 
5  The required ratio = 441 : 400.
= 2523  x   1   17. Let the Principal be Rs P and the rate be R%
 100 
per annum.
5 2
 21   R 
= 2523  x     8820  P1   ......... (i)
 20   100 
Again, according to the question, 3
 R 
 21 
3
 21 
5 and 9261  P 1   ......... (ii)
x   2523  x     100 
 20   20  Now, equation (ii)  equation (i) gives
5
9261 R
 21   1
  8820 100
x 20 
or,   R 441
2523  x   21 3 or, 
  100 8820
 20 
441 100
2 or, R = = 5
x  21  441 8820
or,     R = 5%
2523  x   20  400
Using equation (i)
or, 400x  2523  441  441x
2 2
 5   21 
or, 400x  441x  2523  441 8820  P 1     P
 100   20 
or, 841x  2523  441
441
2523  441 or, 8820  P
or, x =  1323 400
841
or, P = Rs 8000
 The share of A = Rs 1323
 Principal = Rs 8000 and Rate = 5%
The share of B = Rs 2523 – 1323 = Rs 1200
18. We know that
16. Solve as the Q.No. 15. Try yourself.
T
Alternative Method:  R 
A  P 1  

K KUNDAN
Let the amount lent by A be Rs x and amount  100 
lent by B be Rs y.
Now, according to the question, 3
 25 
Amount received by A after 3 years at 5%  
interest or, 4913  P 1  4  ;
 100 
3 3
 
 5   21   
= x 1   = x  
 100   20  [where P is the present worth]
Similarly, amount received by B after 5 years 3
 25 
at 5% interest or, 4913  P 1  
 400 
5 5
 5   21 
= y  1   = y  
   
 100   20 
   
Again, according to the question,  4913   4913 
or, P =  3
 3
 21 
3
 21 
5  1  1     17  
x   y    16     16  
 20   20 
Compound Interest 355

4913  16  16  16 3Y 9Z
or, P = = 4096 Suppose X   k
17  17  17 2 4
Hence the present worth is Rs 4096.
2 4
19. After 2 years amount at CI  X = k, Y = k and Z = k
3 9
2 2
 5   1 
= 4000 1    4000 1   2 4
 100   20   X : Y : Z = k: k: k
3 9
21 21

K KUNDAN
= 4000   = Rs 4410 2 4
20 20 or, X : Y : Z = 1 : :
3 9
After 2 years the person repaid Rs 2210,
 X : Y : Z = 9 : 6 : 4
hence the amount borrowed
(multiplying each term by 9)
= Rs (4410 – 2210) = Rs 2200
21. The person withdraws Rs 110000.
Now, compound interest on Rs 2200 for 2
One year earlier the person had
years at 5% per annum is
 10 
 5 
2
Rs 110000    100000
Rs 2200 1    2200  11 
 100 
Two years earlier the person had
 21 21  10
= Rs  2200    2200  (100000  65000)  = Rs 150000
 20 20  11
= Rs (2425.50 – 2200) At the time of opening the account, the person
= Rs 225.50 had
Total interest paid by him
10
= Rs (225.50 + 410) = Rs 635.50 (150000  125000)  = Rs 250000
2 0 . Rate of interest = 50% in 5 years 11
Now, according to the question, 2 2 . Difference between CI and SI
X is lent for 10 years, Y for 15 years and Z for = Rs 104 – Rs 100 = Rs 4
20 years.  SI for 2 years = Rs 100
X 3X 100
After 5 years X becomes = X  SI for 1 year = Rs = Rs 50
2 2 2
This becomes the principal for next years and Because interest is reckoned yearly, CI and
after 10 years the X will be SI for the first year will be the same.
2
 Rs 4 is the interest on Rs 50 for 1 year.
3  3X   3   Principal = Rs 50, T = 1 year and
    X
2  2  2 SI = Rs 4
Similarly, after 15 years Y will be 4  100
3  Rate = % = 8%
3  3  3   3  50  1

K KUNDAN
       Y Now, SI = Rs 100
2  2  2   2 
 R = 8% and
and after 20 years Z will be T = 2 years
4
3  3  3  3  3  100  100 
    Z    Z  P = Rs   = Rs 625
2  2  2  2  2  82 
Now, according to the question, 23. Let the principal be Rs P.
2 3 4 Rate = R = 10% per annum
3 3 3
  X  Y  Z
2  2  2 10
= = 5% per half-year
9X 27Y 81Z 2
or,  
4 8 16 1 3
Time = T = 1 years = years
9 2 2
(dividing each term by )
4 3
=  2 = 3 half-years
3Y 9Z 2
or, X  
2 4
356 Concept of Arithmetic

T 2T
 R   5 
Compound Interest (CI) = A = P 1   P or, 926.10 = 800 1  
 100   100 
  T 
R  2T
or, CI = P 1    1 926.10  1 
  100   or, = 1  
  800  20 

  3  2T
5  9261  21 
= P 1    1 or, =  
  100   8000  10 

K KUNDAN
 
3 2T
  9261    21   21 
= P  - 1  or,   =  
 10   10 
  8000  
or, 2T = 3
 1261 
= Rs P   and 3 1
 8000   T = 1
2 2
3 1
P  10  Hence the required time = 1 years.
PRT 2 3P 2
SI = = = Rs
100 100 20 25. Let the sum of money be Rs P and rate of
Now, according to the question, interest = 8% per annum.
1261P 3P Rate of interest compounded half-yearly = 4%
 = Rs 183  Difference between CI and SI
8000 20
  2  PR2
1261P  1200P R 
 
or, = Rs 183 = P 1  100   1  100
8000    
 183  8000   2 
or, P = Rs   = Rs 24000
1 
2R  R  2R
 61  = P      1
 100  100  100 
 required sum = Rs 24000  
24. Here, principal (P) = Rs 800
2
Rate (R) = 10% per annum  R 
= P 
10  100 
= = 5% per half-year
2 2
 4 
Amount (A) = Rs 926.10 or, Rs 30 = P   
Let the time be T years.  100 
 Time = 2T half-years
P 1
Time or, Rs 30 =
 Rate  625

K KUNDAN
 Amount = Principal 1  
 100   P = Rs (30 × 625) = Rs 18750