Simple interest and Compound interest

Formula 1:

 S.I =  P * R * N / 100 and A = S.I + P

Where,

P= principal amount

R= rate of interest

N= number of years &

A= amount

Formula 2:

A = P * ( 1 + R / 100n ) ^ nt

A = amount

P = principal

R = rate of interest

n = how the interest is compounded

e.g. n=1…when interest is compounded yearly

n=2… interest is compounded half yearly

n=4… interest is compounded quarterly

n=12… interest is compounded monthly

Exercise:-

1)      What will be the amount on Rs. 6400 for three years at the rate of interest 5% per annum ?

Solution:- here A=? , P=640 , R=5% and N=3

S.I=P*R*N/100

S.I=6400*5*3/100

S.I=960

A=960+6400=7360

2)      A sum of money amount to Rs. 5017 in 2 years at the rate of 8% per annum, what was the sum invested?

Solution:- here P=? , A=4500 , N=2 , R=8%

A=S.I+P=[P*R*N/100]+P

5017=[P*8*2/100]+P

5017=[4P/25]+P è 5017*25=29P èP=4325

3)       Find the time in which Rs. 5000 amount to Rs. 7000 at the rate of 2% p.a.

Solution:- here N=? , P=5000 , A=7000 , R=2%

A=S.I+P è S.I=2000

P*R*N/100=2000

5000*2*N=2000*100

N=20 years

4)      What would be the rate of interest when the sum of Rs. 6200 amount to Rs. 7440 in 5 years.

Solution:- here R=? , P=6200 , A=7440 , N=5

A=P+S.I  è S.I=1240

P*R*N/100=1240

6200*R*5=1240*100

R= 4%

5)      Find the amount when the sum of Rs. 20,000 is compounded half yearly at the rate of 5% p.a for 1 year.

Solution:- here A=? , P=20,000 , R=5% , n=2 , t=1

A = P * ( 1 + R / 100n ) ^ nt

A = 20,000 ( 1 + 5/100 ) ^ 2

A = 20,000 ( 21 / 20 ) ^2

A = 20,000 * 441/400 = 22050