Question

A person lent out a certain sum on simple interest and the same sum on compound interest at a certain rate of interest per annum. he noticed that the ratio between the difference of compound interest and simple interest of 3 years and that of 2 years is 25 : 8. the rate of interest per annum is:

Answer 1

,A person lent out a certain sum on simple interest and the same sum on compound interest at a certain rate of interest per annum. he noticed that the ratio between the difference of compound interest and simple interest of 3 years and that of 2 years is 25 : 8. the rate of interest per annum is: 2457000

Answer 2

"By using the formula of simple interest and compound interest we get,

(1) Difference between compound interest and simple interest on Rs.PP for 2 years at R%R% per annum

=P(R100)2=P(R100)2

(2) Difference between compound interest and simple interest on Rs.PP for 3 years at R%R% per annum

=P(R100)2(R100+3)=P(R100)2(R100+3)

Therefore,

P(R100)2(R100+3):P(R100)2=25:8(R100+3):1=25:88(R100+3)=258R100+24=258R100=1R=1008=12.5P(R100)2(R100+3):P(R100)2=25:8(R100+3):1=25:88(R100+3)=258R100+24=258R100=1R=1008=12.5

Rate of interest per annum = 12.5%

Ans: 12.5%

"