Question

A certain sum of money at compound interest amount to ₹7396 in 2 years and ₹7950.70 in 3 years . Find the rate of interest.

Answer 1

Here it is given that money is compounded annually.

Interest rate is to be found out.

Final amount at the end of 2 years =7396 rs.

i.e. $P(1+r/100)^2 = 7396$

Similarly Final amount at the end of 3 years =7950.70 rs.

i.e.$P(1+r/100)^3 = 7950.70$

Divide II equation by I to eliminate P.

We get (1+r/100) = 1.075

Or r/100 = 0.075

r = 7.5

Rate of interest = 7.5%