Answer:
(Sumita plans to deposit Rs. 21000 in any bank for 3 years. (a) Define compound interest. (b) How much amount will she get at 10% simple interest when she deposits it in a bank N ? Calculate it. (c) How much amount will she get at 9% interest being compounded annually when she deposits it in another bank M?Calculate it. (d) Which bank is better to deposit the sum and how much more amount will she get (e) from the bet
(a) Compound interest is the interest earned on both the initial principal amount and any accumulated interest from previous periods. Unlike simple interest, which is calculated only on the principal amount, compound interest takes into account the interest that has been added to the principal over time.
(b) To calculate the amount Sumita will get at 10% simple interest when she deposits Rs. 21,000 in bank N for 3 years, we can use the formula for simple interest:
Simple Interest = (Principal * Rate * Time) / 100
In this case:
Principal (P) = Rs. 21,000
Rate of interest (R) = 10%
Time (T) = 3 years
Simple Interest = (21,000 * 10 * 3) / 100
Simple Interest = 6,300
Amount = Principal + Simple Interest
Amount = 21,000 + 6,300
Amount = Rs. 27,300
Therefore, Sumita will get Rs. 27,300 at 10% simple interest when she deposits it in bank N.
(c) To calculate the amount Sumita will get at 9% interest compounded annually when she deposits Rs. 21,000 in bank M for 3 years, we can use the formula for compound interest:
Compound Interest = Principal * [(1 + Rate/100) ^ Time] - Principal
In this case:
Principal (P) = Rs. 21,000
Rate of interest (R) = 9%
Time (T) = 3 years
Compound Interest = 21,000 * [(1 + 9/100) ^ 3] - 21,000
Calculating the compound interest:
Compound Interest = 21,000 * (1.09^3) - 21,000
Compound Interest ≈ 21,000 * 1.29503 - 21,000
Compound Interest ≈ 27,139.63 - 21,000
Compound Interest ≈ Rs. 6,139.63
Amount = Principal + Compound Interest
Amount = 21,000 + 6,139.63
Amount ≈ Rs. 27,139.63
Therefore, Sumita will get approximately Rs. 27,139.63 at 9% interest compounded annually when she deposits it in bank M.
(d) To determine which bank is better to deposit the sum, we compare the amounts received in bank N (simple interest) and bank M (compound interest).
In bank N, Sumita will receive Rs. 27,300, while in bank M, she will receive approximately Rs. 27,139.63.
Comparing the amounts, we can see that Sumita will get a slightly higher amount in bank N.
(e) The amount she will get from the better bank (bank N) is Rs. 27,300 - Rs. 27,139.63 = Rs. 160.37 more than bank M.
Explanation:
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