the simple interest on a certain sum of money for 2 years at 4 1/2% P. a is rs. 5400.what will be the compound interest on that s

the simple interest on a certain sum of money for 2 years at 4 1/2% P. a is rs. 5400.what will be the compound interest on that sum at the same rate for the same time period, if the interest is compounded annually.

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  1. Answer:

    Step-by-step explanation:

    Simple interest = Principal x time x rate

    ⇒ Rs.5400 = (Principal x 2 x  4  1/2) /100

    ⇒ Rs.5400 =( Principal x 2 x  9/2 )/100

    ⇒Rs.5400 = (Principal x9)   /100

    ⇒ Rs. 5400 x 100 = Principal x 9

    ⇒ Rs.540000 = Principal x 9

    ⇒ Rs.540000 / 9 = Principal

    ⇒ Principal = Rs.60,000

    Compound interest = P [ 1 + R/100 ] power n

    = 60,000 [ 1 + (9/2) /100] power 2

    = 60,000 [ 1 + 9/200]²

    = 60,000 [ 200/200 + 9/200]²

    = 60,000 [ 209 / 200]²

    = 60,000 x (209 / 200) x (209/ 200)

    = (60,000 x 209 x 209 ) / 200 x 200

    = 6 x 209 x 209 / 4

    = 3 x 209 x209 / 2

    = 65521.5

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