Aptitude - Compound Interest - Discussion

It should be 121 instead of 21 cuz 11^2=121,
525=p(1+10/100)^2,
525=p(110/100)^2.

The amount at the end 1st year, A=45000(1+ 15/100)
= Rs 51750.

The farmer paid Rs 15000, so amount left ,A = 51750 -15000
= Rs 36750.

The amount at the end of 2nd year, A= 36750(1+ 15/100)
=Rs 42262.5.

The farmer has to Rs 42262.5 at the end of the second year.

A farmer takes a loan of Rs:45000 at 15% per annum to instal a pump in his field. He pays back 15000 to the bank along with the interest due at the end of the first year. At the end of second year he pays back the balance to the bank. How much does the farmer pay the bank at the end of second year?

Can anyone solve this?

@Pratiksha,
The general formula for calculating compound interest is,
P*(1+R/100)^n, but remember to subtract off the principal after in order to get the interest,

For instance, CI =Amount - Principal.

But, in case you wish to do it at once your apply P*(1+R/100)^n - P by using this formula you automatically get the interest compounded, you may not need to subtract off the principal again like in the first case.

Can anybody tell me when to use this formula?

P*(1+R/100)^-P.
and when to use,
P*(1+R/100)^.

Please, explain it.

21% = 525 then 20% = 525/21*20 = 500 ans.

Thank you @P Kumar.

As they are saying 10% per annum and 2 years in time, we can be sure that Rs 21 gained as interest for Rs 100 in 2 years.

So, C.I is 21 when Principal is 100.
if C.I equal 525, the principal will be (100 * 525)/21.
= 2500.

It's very simple just look at the question you have a direct relation between amount 525 and 10%.

For 2 years u get 525 at 10% for 1 year it is around 260. So if u invest around 2500 for 1 year at 10% the amount u get as interest is 250 but compound interest is slightly higher than simple interest and remember this is logical.

Now just put sum in simple interest formula
2500 * 4 * 5/100 = 500.

Can anyone explain how -1 at place P?