Do you observe anything interesting in the solutions of the two - Figure it out - Page 22, 23, 24

Remove Ads Share on WhatsApp

Transcript

Question 3 Do you observe anything interesting in the solutions of the two questions above? Share and discuss. Let us try to generalise the pattern observed in each of the options.Yes, this is a brilliant mathematical pattern! Notice that the Simple Interest in both Question 1 and Question 2 is exactly the same (₹24,000). That's because ( 10%×2 years) is mathematically the same as ( 5%×4 years). However, look at the Compound Interest. Even though the simple math looks equal, compounding over more years ( 4 years instead of 2 ) gave us more money (₹ 24,310 vs ₹ 24,200 ), even at a lower interest rate! The more times the money "snowballs" (compounds), the bigger it gets.

CA Maninder Singh's photo - Co-founder, Teachoo

Made by

CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 16 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.