Compound Interest 1

ID : U-41709-58-1547-Compound-Interest [1]
Class 8
Compound Interest
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Answer the questions
(1) At what rate percent per annum will a sum of Rs.90000 amount to Rs.116964 in 2 years,
compounded annually ?
(2) Population of a town increases by 10% every year. If current population of the town is 300000. Find the
population of town after 2 years.
(3) Find compound interest on Rs. 3000 for 2 years at 6% per annum compounded annually.
(4) Find the compound interest on Rs.90000 for 1 year at 14% per annum, compounded half yearly.
(5) Find compound interest on Rs. 10000 for 1 year and 3 months at 40% per annum compounded
annually.
(6) A certain sum amounts to Rs.80143 in 2 years at 7% per annum, compound interest, compounded
annually. Find the sum.
(7) Balvinder borrowed Rs. 300 from a bank at the interest rate of 10% per annum compounded annually.
What would be the amount payable to bank after 2 years?
(8) Find the compound interest on Rs.20000 for 6 months at 8% per annum, compounded quarterly.
(9) Find the amount of Rs.20000 after 2 years, compounded annually. The rate of interest is 10% per
annum during the first year and 16% per annum during the second year. Also, find the compound
interest.
(10) Number of employees in a organization increases by 20% every year. If there are 9000 employees in
the organization, find the number of employees in organization after 2 years.
(11) Sunil bought a plot at Rs. 400000. If its value appreciates at the rate of 10% per annum, find the value
of the plot after 3 years.
(12) At the rate of 10% per annum compounded annually, how long would it take for a sum of Rs. 9000 to
compound to Rs. 10890.
1
(13) Find compound interest on Rs.64000 for 3 years at 17 % per annum compounded annually.
2
(14) The difference between the compound interest, compounded annually and the simple interest on a
certain sum for 2 years at 9% per annum is Rs.567. Find the sum.
(15) Find compound interest on Rs. 10000 for one year and 6 months at 2% per annum compounded half
yearly.
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Answers
(1) 14%
Step 1
Given:
Sum
(P) = Rs.90000
Time
(n) = 2 years
Amount
(A) = Rs.116964
Let us assume that the rate percent per annum is
R%.
Step 2
Now,
2
A = P × (1 + )
R
100
2
⟹ 116964 = 90000 × (1 + )
R
100
2
⟹ (1 + ) =
R 116964
100 90000
2 2
⟹ (1 + ) =( )
R 342
100 300
R 342
⟹ 1+ =
100 300
R 342
⟹ = −1
100 300
42
⟹R= × 100 = 14
300
Step 3
Thus, the rate percent per annum is
14%.
(2) 363000
Step 1
Since population increases by 10% annually, we can use compound interest formula where
current population can be considered as principal.
Step 2
Current population or principal, P = 300000
Rate, R by which population increases every year = 10%
Time, n = 2 years
Step 3
R
Population of the town after 2 years or Amount = P [1 + ]n
100
10
= 300000 [1 + ]2
100
= 300000 × 1.21
= 363000
Step 4
Therefore, the population of the town after 2 years will be 363000.
(3) Rs. 370.8
Step 1
It is given that,
Principal, P = Rs. 3000
Rate, R = 6%
Time, n = 2 years
R
Amount = P(1 + )n
100
6
= 3000(1 + )2
100
= 3000(1.06)2
= 3000 × 1.1236
= Rs. 3370.8
Step 2
Compound interest = Amount - Principal
= 3370.8 - 3000
= 370.8
Step 3
Therefore, the compound interest is Rs. 370.8.
(4) Rs.13041
Step 1
Given:
Principal
(P) = Rs.90000
Time
(n) = 1 year
= 2 half years
Rate
(R) = 14% per annum
=( )% per half year

14
2
= 7% per half year
Step 2
n
) , we have
R
Using the formula, A = P(1 +
100
2
Amount after 1 year = 90000 × (1 + )
R
100
2
= 90000 × (1 + )
7
100
2
= 90000 × ( )
107
100
107 107
= 90000 × ×
100 100
= Rs.103041
Step 3
∴ Compound interest = Amount − Sum

= Rs.(103041 − 90000)
= Rs.13041
Step 4
Therefore, the compound interest is
Rs.13041.
(5) Rs. 5400
Step 1
Rate, R = 40%
3
Time, n = 1 years and 3 months = 1 year
12
Step 2
For first 1 years, interest can be calculated using compound interest formula,
R
Amount = P [1 + ]n
100
40
Amount = 10000 [1 + ]1
100
= 10000 × 1.4
= Rs. 14000
Step 3
Since interest is compounded annually only, interest for remaining 3 month should be calculated
as simple interest on a principal of Rs. 14000,
(3/12)40
Amount after simple Interest for 3 months = 14000 [1 + ]
100
⇒ = 14000 × 1.1
⇒ = Rs. 15400
Step 4
Total interest = Amount - Principal
15400 - 10000
= Rs. 5400
Step 5
Therefore, the total compound interest is Rs. 5400.
(6) Rs.70000
Step 1
Let us assume that the sum is
P.
Step 2
Given:
Time
(n) = 2 years
Rate
(R) = 7%
Amount
(A) = Rs.80143
Step 3
Now,
2
A = P × (1 + )
R
100
2
⟹ 80143 = P × (1 + )
7
100
2
⟹ 80143 = P × ( )
107
100
100 100
⟹ P = 80143 × × = 70000
107 107
Step 4
Thus, the sum is
Rs.70000.
(7) Rs. 363
Step 1
It is given that,
Rate, R = 10%
Time, n = 2 years
R
Amount = P(1 + )n
100
10
= 300(1 + )2
100
= 300 × 1.21
= 363
Step 2
Therefore, the amount payable to the bank after 2 years is Rs. 363.
(8) Rs.808
Step 1
Given:
Principal
(P) = Rs.20000
Time
(n) = 6 months
= 2 quarters
Rate
(R) = 8% per annum
= ( )% per quarter
8
4
= 2% per quarter
Step 2
n
) , we have
R
100
2
Amount after 6 months = 20000 × (1 + )
R
100
2
= 20000 × (1 + )
2
100
2
= 20000 × ( )
102
100
51 51
= 20000 × ×
50 50
= Rs.20808
Step 3
∴ Compound interest = Amount − Sum

= Rs.(20808 − 20000)
= Rs.808
Step 4
Rs.808.
(9) Amount = Rs.25520
Compound interest = Rs.5520
Step 1
Given:
Principal
(P) = Rs.20000
R1 = 10%
R2 = 16%
)(1 + 2 ), we have
R1 R
100 100
Amount after 2 years = Rs.{20000 × (1 + ) × (1 + )}

10 16
100 100
)
110 116
= Rs.(20000 × ×
100 100
= Rs.25520
Step 2
∴ Compound interest = Amount − Principal

= Rs.(25520 − 20000)
= Rs.5520
Step 3
Rs.5520.
(10) 12960
Step 1
It is give that,
Number of employees in the organization, P = 9000
Yearly compounding rate, R = 20%
Time, n = 2 years
Step 2
R
Number of employees after 2 years = P(1 + ) n ...[Using compound interest formula]
100
20
= 9000(1 + )2
100
= 9000 × (1.2)2
= 9000 × 1.44
= 12960
Step 3
Therefore, the number of employees in the organization after 2 years is 12960.
(11) Rs. 532400
Step 1
We have been asked to find the value of the plot after 3 years.
Step 2
Rate, R = 10%
Time, n = 3 years
R
Amount = P(1 + )n
100
10
= 400000(1 + )3
100
= 400000 × 1.331
= 532400
Step 3
Therefore, the value of plot after the 3 years is Rs. 532400.
(12) Two years
Step 1
Let the time be n years.
Step 2
According to the question,
Rate, R = 10%
Amount = Rs. 10890
Step 3
Let's find the time.
R
Amount = P(1 + )n
100
10
⇒ 10890 = 9000(1 + )n
100
10890 110
⇒ =( )n
9000 100
11 11
⇒( )2 = ( )n
10 10
⇒n=2
Step 4
Therefore, in 2 years, Rs. 9000 will become Rs. 10890 at 10% per annum compounded annually.
(13) Rs.39823
Step 1
Given:
Principal
(P) = Rs.64000
Rate
1 35
(R) = 17 % = %
2 2
Time
(n) = 3 years
n
) , we have
R
100
3
Amount after 3 years = Rs.{64000 × (1 + )}

35
2 × 100
3
= Rs.{64000 × ( )}
235
200
× }
47 47 47
= Rs.{64000 × ×
40 40 40
= Rs.(47 × 47 × 47)
= Rs.103823
Step 2
∴ Compound interest = Amount − Principal

= Rs.(103823 − 64000)
= Rs.39823
Step 3
Rs.39823.
(14) Rs.70000
Step 1
Given:
Rate
(R) = 9%
Time
(n) = 2 years
Let us assume that the sum is
P.
Step 2
Compound Interest = P × (1 + ) −P
R
100
2
= P × (1 + ) −P
9
100
= (P × )−P
109 109
×
100 100
11881P
= −P
10000
1881P
=
10000
Step 3
P ×R×T
Simple Interest, SI =
100
P ×9×2
=
100
9P
=
50
Step 4
It is given that the difference between the compound interest and the simple interest is
Rs.567.
∴ CI − SI = 567
1881P 9P
⟹ − = 567
10000 50
81P
⟹ = 567
10000
10000
⟹ P = 567 × = 70000
81
Step 5
Thus, the sum is
Rs.70000.
(15) Rs. 303.01
Step 1
We have been asked to find the compound interest on Rs. 10000 for one year and 6 months at 2%
per annum compounded half yearly.
Step 2
Number of terms, n = Number of half years in one year and 6 months = 3
Interest Rate per annum = 2%, Interest Rate per term of half year, R = 2% ÷ 2 = 1%
Step 3
R
Amount = P(1 + )n
100
1
= 10000(1 + )3
100
= 10000 × 1.030301
= Rs. 10303.01
Step 4
Compound Interest = Amount - Principal
= 10303.01 - 10000
= Rs. 303.01
Step 5
Therefore, the compound interest is Rs. 303.01.

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ID : U-41709-58-1547-Compound-Interest [1]

Answer the questions

© 2018 Edugain (www.edugain.com). Many more such worksheets can be

(3) Rs. 370.8

=( )% per half year

∴ Compound interest = Amount − Sum

∴ Compound interest = Amount − Sum

Amount after 2 years = Rs.{20000 × (1 + ) × (1 + )}

∴ Compound interest = Amount − Principal

(11) Rs. 532400

Amount after 3 years = Rs.{64000 × (1 + )}

∴ Compound interest = Amount − Principal

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