Question

A sum compounded annually becomes 25/16 times of itself in two years.Determine the rate of intrest per annum

Answer 1

the answer is 25 percent

Answer 2

Answer:

Rate of interest per annum is 25%

Step-by-step explanation:

Let Principal be x

then Amount will be = $\frac{25}{16}x$

Time period = 2 years

We have to calculate rate of interest.

Using formula for compound interest

$A=P(1+\frac{r}{100})^t$

Substitute, we have,

$\frac{25}{16}x=x(1+\frac{r}{100})^2$

Solve, we have,

$\frac{25}{16}=(1+\frac{r}{100})^2$

Taking square root both side, we have,

$\frac{5}{4}=1+\frac{r}{100}$

Solve for r, we have,

$(\frac{5}{4}-1)\times 100=r$

Thus, r = 25%

Thus, Rate of interest per annum is 25%