1.

If Rs. 125000 amounts to Rs. 140608 at 8% compound interest, interest being compounded semi-annually in certain time period. If the same amount is invested at same rate of interest and time, the amount of simple interest is?1). Rs. 1400002). Rs. 1450003). Rs. 1500004). Rs. 200000

Answer»

Given Sum(Principal) = Rs. 125000

Amount at the end compounded semiannually = Rs. 140608

RATE of interest per annum (r) = 8%

For semiannual compounding, the interest rate will be HALVED = (8/2)% = 4%

From the equation of COMPOUND interest,

Amount = Principal [1 + (r/100)]2n

⇒ 140608 = 125000(1 + (4/100))2n

⇒ 140608/125000 = (104/100)2n

⇒ (52/50)3 = (52/50)2n

As bases are equal, equalize the powers, n = 3/2 = 1.5

Formula for Amount under Simple Interest (A) = P [1 + (nr/100)]

⇒ A = 125000 [1 + (12/100)]

⇒ A = 125000 (1 + 0.12)

⇒ A = 125000 × 1.12

⇒ A = Rs. 140000

∴ Amount = Rs. 140000


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