Question

A sum of money is invested at C.I payable annually. The amounts of interest in two successive years are ₹2,700 and ₹2,880. Find the rate of interest.

Answer 1

Answer:

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Answer 2

Rate of interest = 2.9%

Explanation:

P + 2700 = P (1 + r/100)^1

1 + 2700 / P = 1 + r / 100

2700 / P = r / 100

Pr = 270000 ----- (1)

P + 2880 = P ( 1 + r / 100)^2

1 + 2880 / P = (1 + r / 100)^2

2880 / P  = (1 + r / 100)^2 - 1 ----- (2)

Substituting (1) in (2), we get:

2880*r / 270000 = (1 + r / 100)^2 - 1

2880*r / 270000 = 1 + r^2 + 2r/50 - 1

2880*r / 270000 = r^2 + 2r/50

2880r = 270000 (r^2 + 2r/50)

2880r = 270000r^2 + 10800r

2880r = 270000r^2 + 10800r

-7920r = 270000r^2

-7920 = 270000r

r = - 7920 / 270000

= 0.0293

Rate of interest = 2.9%