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