Question

A certain sum amounts to 7,396 in 2 years and 7,950.70 in 3 years. Find the rate of interest if the interest is compounded annually.
(Interest on 7,396 is 7,950.70-7,396 for 1 year)​

Answer 1

Answer:

7.5%

Step-by-step explanation:

Let the interest rate be r% p.a.

Amount of 7396 invested in the second year becomes the principal amount which increases to 7950.7 in one year compounded annually at r% p.a.

So, Compound Interest Amount = 7950.7 = 7396{1+(r/100)}^1

7950.7/7396 = (1+r/100)

1.075 = 1+r/100

r = (1.075-1)*100

r = 7.5% p.a.