SIMPLE INTEREST

Solution:
, when interest is reckoned using compound interest, interest being compounded annually. The
difference in the simple interest and compound interest for two years is on account of the interest
paid on the first year's interest
Hence 12% of simple interest = 90 => simple interest = =750.
As the simple interest for a year = 750 @ 12% p.a., the principal =
= Rs.6250.
If the principal is 6250, then the amount outstanding at the end of 3 years = 6250 + 3(simple
interest on 6250) + 3 (interest on simple interest) + 1 (interest on interest on interest) = 6250 +
3(750) + 3(90) + 1(10.80) = 8780.80.
14. Rs. 5887 is divided between Shyam and Ram, such that Shyam's share at the end of 9
years is equal to Ram's share at the end of 11 years, compounded annually at the rate of
5%. Find the share of Shyam.
(A) 2088 (B) 2000
(C) 3087
(D) None of these
Answer –Option (C)
Solution:
Shyam's share * (1+0.05) 9 = Ram's share * (1 + 0.05) 11
Shyam's share / Ram's share = (1 + 0.05) 11 / (1+ 0.05) 9 = (1+ 0.05) 2 = 441/400
Therefore Shyam's share = (441/841) * 5887 = 3087.
The question for the day is from the topic simple and compound interest. Shawn
invested one half of his savings in a bond that paid simple interest for 2 years and received
Rs.550 as interest. He invested the remaining in a bond that paid compound interest,
interest being compounded annually, for the same 2 years at the same rate of interest and
received Rs.605 as interest. What was the value of his total savings before investing in these
two bonds?
(A) Rs.5500
(B) Rs.11000
(C) Rs.22000
Answer - Option (D)
(D) Rs.2750
Solution:
Shawn received an extra amount of (Rs.605 – Rs.550) Rs.55 on his compound interest paying