Question

A sum compounded annually becomes 25/16 timesof itselfin2 years . Detemine the rate
of interest per annum

Thankyou

Answer 1

Explanation:

Solution :

let the principal be x

then amount will be 25/16 x

time period = 2 years

we have to calculate rate of interest using formula is compound interest

A = P(1 + r/100)^t

substituting we have,

==> 25/16 x = x(1 + r/100)²

==> 25/16 = (1 + r/100)²

==> √25/16 = 1 + r/100

==> 5/4 = 1 + r/100

==> 5/4 - 1 = r/100

==> 5 - 4/4 = r/100

==> ¼ = r/100

==> r = 100/4

==> r = 25

∴ rate of interest per annum is 25%