Why 2nd formula of C.I is used?

Aug 2014
507
1
India
Value of X, Ram invested Rs 6400 on compound interest
at the rate of X% and gets an amount of Rs 8464 as interest after 2 yrs.

Quantity II → A/P = (1+ R/100)^n
→ √(8464/6400) = (1+ R/100)^n
→ 23/20 = 1 + R/100
→ R = 15%

There are C.I formulas:

C.I = P([1 + R/100]^n – 1);

A = P (1 + R/100)^n

Why 2nd formula of C.I is used?
 
Last edited by a moderator:

skipjack

Forum Staff
Dec 2006
21,482
2,472
The first formula had misplaced parentheses, which I've corrected, so A = P + C.I.