A person invests Rs.5000 for three years at a certain rate of interest compounded annually.at the end of two years this sum amounts to Rs.6272.calculate: a.the rate of interest per annum. b.the amount at the end of the third year.
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A sum P, compounded annually will amount to A, which can be given by the formula,
A = P[1+r/100]^n, where r is the rate of interest and n is the compounding duration.
In this case, A = Rs. 6272, P = Rs. 5000, n = 2 and r needs to be found out.
Thus, 6272 = 5000[1+r/100]^2
or 6272/5000 = (1+r/100)^2
1+r/100 = sqrt (6272/5000) = sqrt (1.2544) = 1.12
Therefore, r/100 = 1.12-1 = 0.12
Or, the rate of interest is 12%.
The amount at the end of the third year is
A = 5000[1+12/100]^3 = 5000*1.404928 = Rs. 7024.64
Thus, the rate of interest, r = 12% and amount at the end of 3 years would be Rs. 7024.64
A = P[1+r/100]^n, where r is the rate of interest and n is the compounding duration.
In this case, A = Rs. 6272, P = Rs. 5000, n = 2 and r needs to be found out.
Thus, 6272 = 5000[1+r/100]^2
or 6272/5000 = (1+r/100)^2
1+r/100 = sqrt (6272/5000) = sqrt (1.2544) = 1.12
Therefore, r/100 = 1.12-1 = 0.12
Or, the rate of interest is 12%.
The amount at the end of the third year is
A = 5000[1+12/100]^3 = 5000*1.404928 = Rs. 7024.64
Thus, the rate of interest, r = 12% and amount at the end of 3 years would be Rs. 7024.64
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