For a certain amount, simple interest for 2 years at the rate of 12.5% is Rs. 800.Find the compound interest for 2 years for the same amount at the same rate of interest?
Let the principle amount be P.
SI for 2 years = 800
⇒ P × 12.5 × 2/100 = 800
⇒ P = 3200
CI for 2 years = 3200(1 + 12.5/100)2 - 3200
⇒ 3200(1 + 1/8)2 - 3200
⇒ 3200(9/8)2 - 3200
CI = 4050 - 3200
∴ CI = Rs. 850