A sum of money becomes K16,000 in 4 years and K18,522 in 7 years. Find the rate where the interest is compounded quarterly in this investment.
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Answer:
Let P be the principal.
As we know that, compound interest is given as-
A=P(1+
100
r
)
n
Here,
A= Amount =Rs. 7290
P= Principal
r= Rate of interest =8%
n= Time period =2 years
Therefore,
7290
7290
P
=P(1+
100
8
)
2
=P(
25
27
)
2
=7290×(
27
25
)
2
=6250
Thus the sum invested is Rs. 6250
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