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The Simple Interest accurued on an amount of 24000 at the end of 2 years is 11,520. Find the C I accrued on the same amount at the same rate of interest, for the same period? Ans: C I = 12,902.40

My Try: A = 24,000

T = 2 Years

S I = 11,520

P R T /100 = 11,520

A = S I + P

24,000 = P + 11,520

P = 12,480

Now putting P value in S I Formulae to get rate of interest.

11,520 = (12,480 * 2 * R )/100

11,520*5/1248 = R

R = 46 %

Now putting R value in C I on same amount.

= 24,000 {([1 + 46/100]^2) -1}

= 24,000 {([1.46]^2)-1}

= 27,158 (Does n’t match final answer why?, not even close to it)

Athul Dray
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  • I've shown you how I'd do it, but I can see weirdness in your working even without being that familiar with the formulas. Why is $24000 = P + 11520$? $11520$ is already given as the simple interest. – Deepak Jan 31 '16 at 05:53
  • @Deepak In question, see the first sentence: The Simple Interest ..... is 11,520. so I substitute S I in A = P + S I to get P value. – Athul Dray Jan 31 '16 at 05:56
  • I assume $A$ is total amount, $P$ is principal and $SI$ is simple interest? You are already given $P$ and $SI$. You don't know $A$ but calculating it is not necessary here. But taking $A$ to be $24000$ is wrong. In fact, $A = 24000 + 11520 = 35520$. – Deepak Jan 31 '16 at 05:58
  • @Deepak see again there is words:"amount of 24000" in the question. so i take A = 24000. – Athul Dray Jan 31 '16 at 05:59
  • You are misunderstanding the question. That is the principal amount, $P$. Meaning the amount of investment you start with. – Deepak Jan 31 '16 at 05:59
  • @Deepak you are already mention you are not familiar with all the financial formulae in the answer & yes you really not familiar with financial formulae. – Athul Dray Jan 31 '16 at 06:01
  • OK, then disregard my answer. It doesn't bother me. But I am right. – Deepak Jan 31 '16 at 06:02
  • @Deepak yes you are right that you are not familiar with all the financial formulae. – Athul Dray Jan 31 '16 at 06:03
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    I'm done wasting time on this, and you. Bye now. – Deepak Jan 31 '16 at 06:04

2 Answers2

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I'm not familiar with all the financial formulae, but the concepts are simple. Simple interest is always calculated on the original principal.

Interest per year is $\frac{$11520}{2} = \$5760$, giving an annual interest rate of $\frac{5760}{24000} \times 100\% = 24 \%$.

Assuming that's compounded annually, in two years you would have $1.24^2$ of your original investment.

The proportional increase would be $1.24^2 - 1 = 0.5376$.

In absolute terms, that's a compound interest of $0.5376 \times \$24000 = \$12902.40$.

Deepak
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  • if your are not familiar with all the financial formulae, then why you are posting answer?. & also i didn't understand your procedure you followed. – Athul Dray Jan 31 '16 at 05:57
  • @user309491 I'm posting an answer to try and help you. And it's infinitely better to understand concepts than blindly apply formulae you don't understand, which seems to be your issue. I don't want to be rude, but you're not exactly being nice here. – Deepak Jan 31 '16 at 06:01
  • yourself mentioned, you are not familiar with all the financial formulae. so what can i do? – Athul Dray Jan 31 '16 at 06:04
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For simple interest,

$A(2)=(24000+11520)=24000(1+2i)$

We get $i=0.24$

For compound interest,

$A(2)=24000(1+0.24)^2=36902.4$

$I_{[2,0]}=A(2)-A(0)=36902.4-24000=12902.40$

Tosh
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    If you do not understand the workings, then this means you are not familiar with financial terms and so do not waste your time posting questions whose logic is totally unfamiliar to you. When someone tries to help you,and it does not suit your requirements, then at least try to respect it. On this, wish you luck and hope you adopt a proper attitude next time – Tosh Feb 01 '16 at 14:57