Compound Interest E1D4Ed
1. **Problem statement:** A person invests 100000 at 10% per annum compounded annually, and the amount grows to 133100. We need to find:
(i) Total compound interest earned.
(ii) Number of years taken.
(iii) Simple amount for the same rate and time.
2. **Formula for compound amount:**
$$A = P \left(1 + \frac{r}{100}\right)^n$$
where $A$ is the amount, $P$ is the principal, $r$ is the annual interest rate, and $n$ is the number of years.
3. **Calculate total compound interest (i):**
Compound interest $= A - P = 133100 - 100000 = 33100$
4. **Calculate number of years (ii):**
Given $A = 133100$, $P = 100000$, $r = 10$, solve for $n$:
$$133100 = 100000 \left(1 + \frac{10}{100}\right)^n = 100000 (1.1)^n$$
Divide both sides by 100000:
$$1.331 = (1.1)^n$$
Take natural logarithm:
$$\ln(1.331) = n \ln(1.1)$$
$$n = \frac{\ln(1.331)}{\ln(1.1)} \approx \frac{0.286}{0.0953} \approx 3$$
So, the investment period is 3 years.
5. **Calculate simple amount (iii):**
Simple interest formula:
$$SI = \frac{P \times r \times t}{100} = \frac{100000 \times 10 \times 3}{100} = 30000$$
Simple amount $= P + SI = 100000 + 30000 = 130000$
**Final answers:**
(i) Compound interest = 33100
(ii) Number of years = 3
(iii) Simple amount = 130000