A simple question which involves finding out the total amount if the principal amount is given. Find out the total amount based upon comparing simple interest and compound interest for the same principal.

1. Simple and Compound Interest Q3

2. Qn: Simple and Compound Interest
Ram deposits Rs. P with a bank at r% compound interest
and sees it reach Rs.16P in 20 years. If he had invested
the same amount at r% simple interest for 20 years, what
would be the amount?
(a) Between Rs. 2P and 2.5P
(b) Between Rs. 2.5P and 3P
(c) Between 3P and 3.5P
(d) Between 3.5P and 4P

3. Soln: Simple and Compound Interest
P (1 + r)20 = 16P
(1 + r)20 = 16
((1 + r)10)2 = 42
(1 + r)10 = 4
((1 + r)5)2 = 22
(1 + r)5 = 2
In order for the money to double, the approximate formula for r =
72
𝑛
=
14.4%.
Ram deposits Rs. P with a bank at r% compound interest and sees it
reach Rs.16P in 20 years. If he had invested the same amount at r%
simple interest for 20 years, what would be the amount?

4. Soln: Simple and Compound Interest
Rate of interest should be roughly 14 – 15%
If he had invested this in simple interest,
A = P + P × 20 ×
14 −15 %
100
= 3.8P to 4P
Answer choice (d)
Ram deposits Rs. P with a bank at r% compound interest and sees it
reach Rs.16P in 20 years. If he had invested the same amount at r%
simple interest for 20 years, what would be the amount?