SIMPLE INTEREST

P is the principal that is invested
r is the rate of interest in % p.a
And n is the number of years for which the principal has been invested.
In this case, it would turn out to be A =
= 2592.
10. If a sum of money grows to 144/121 times when invested for two years in a scheme
where interest is compounded annually, how long will the same sum of money take to treble
if invested at the same rate of interest in a scheme where interest is computed using simple
interest method?
(A) 9 years (B) 22 years (C) 18 years (D) 33 years
Answer - Option(B)
Solution
The sum of money grows to
times in 2 years.
If P is the principal invested, then it has grown to
interest.
P in two years when invested in compound
In compound interest, if a sum is invested for two years, the amount is found using the following
formula
= P in this case.
=> => => =>
If r =
as follows:
, then in simple interest the time it will take for a sum of money to treble is found out
Let P be the principal invested. Therefore, if the principal trebles = 3P, the remaining 2P has
come on account of simple interest.
Simple Interest = , where P is the simple interest, r is the rate of interest and ‘n’ is the
number of years the principal was invested.
Therefore, 2P = => 2 = or n = 22 years.