Question

A sum amounts to rs.9680 in 2 yrs and to rs.10648 in 3 yrs compounded annually.find principal and rate of interest per annum.

Answer 1

We have to use the formula of compound interest here, which is

$A = P (1+r)^n$

It is given that, a sum amounts to rs.9680 in 2 yrs and to rs.10648 in 3 yrs .

So we will get

$9680=P(1+r)^2, 10468=P(1+r)^3$

Dividing both equations .

$\frac{9680}{10468} = \frac{1}{1+r}$

$\frac{10468}{9680} = 1+r$

$r =0.0814=8.14%$

Substituting back the value of r, we will get

$9680=P(1+0.0814)^2$

$9680= P(1.16942596) \\ P = 8277.57$