Question

a certain sum of money at compound interest become rs 7396 in two years and rs 7950.70 in three years.find the rate of interest

Answer 1

Solution: Given that : Amount, A1= Rs. 7396, n1 = 2 years

                                   Amount, A2= Rs. 7950.70, n2=3 years

We know that: Amount = P(1 + R/100)^n

Therefore, A1 = P(1 + R/100)^n1 => 7396 = P(1+R/100)^2 ------------(1)

                 A2 = P(1+R/100)^n2 => 7950.70 = P(1+R/100)^3-------------(2)

Divide equation (2) by equation (1) :

7950.70/7396 = P(1+R/100)^3 / P(1 + R/100)^2

1.075 = 1 + R/100

1.075 - 1 = R/100

0.075 = R/100

R = 7.5 %

Therefore, rate of interest is 7.5 % per annum