The compound interest on a sum of money for 2 years.

The compound interest on a sum of money for 2 years is ₹ 1331.20 and the simple interest on the same sum for the same period at the same rate is ₹ 1280. Find the sum and the rate of interest per annum.

Solution:

It is given that
CI for 2 years = ₹ 1331.20
SI for 2 years = ₹ 1280
So the difference = 1331.20 – 1280 = ₹ 51.20
Here ₹ 51.20 is the simple interest on 1280/2 = ₹ 640 for one year
We know that
Rate = (SI × 100)/ (P × t)
Substituting the values
= (51.20 × 100)/ (640 × 1)
Multiplying and dividing by 100
= (5120 × 100)/ (100 × 640)
= 8% p.a.
So the SI for two years at the rate of 8% pa
Sum = (SI × 100)/ (r × t)
Substituting the values
= (1280 × 100)/ (8 × 2)
= ₹ 8000

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