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Expert: Chanda Walker - 3/12/2009


Question
a man borrows $12000 at a certain rate of compound interest per annum.his loan becomes 12730.80 at the end of 2 years. find the principal in the beginning of second year. find the compound interest  on the sum for 3 years

Answer
I assume it compounds yearly.

12730.80 = 12000*(1 + r)*(1 + r)
12730.80 = 12000*(1 + r)^2
1.0609 = (1 + r)^2
1.03 = 1+ r
r = 3%

P(1) = 12000*(1+r)^1
= 12000*1.03
=$12360

I = P(3) - P(0) = 12000((1+r)^3 - 1)
= 12000( .09273)
=$1112.72

Let me know if I can help further.

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Chanda Walker

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I can answer word problems involving mathematics at the high school and college level. I particularly enjoy calculus word problems. Please don't just type the math problem without comments. If you don't tell me what problem your having, I can't help.

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Have done word problems as a tutor and as a student of mathematics and physics for years.

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Sigma Xi

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Optical Science PhD

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I've answered hundreds of questions here at AllExperts.com in algebra, physics and general math sections.

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