Question:
Find the compound interest at the rate of 5% for three years on that principal which in three years at the rate of 5% per annum gives Rs 12000 as simple interest.
Solution:
$\mathrm{P}=\frac{\mathrm{SI} \times 100}{\mathrm{RT}}$
According to the given values, we have:
$=\frac{12,000 \times 100}{5 \times 3}$
$=80,000$
The principal is to be compounded annually.
So,
$\mathrm{A}=\mathrm{P}\left(1+\frac{\mathrm{R}}{100}\right)^{\mathrm{n}}$
$=80,000\left(1+\frac{5}{100}\right)^{3}$
$=80,000(1.05)^{3}$
$=92,610$
Now,
$\mathrm{CI}=\mathrm{A}-\mathrm{P}$
$=92,610-80,000$
$=12,610$
Thus, the required compound interest is Rs 12,610 .