Question

At what rate of compound interest per annum will a sum of rs. 50000 become rs. 73205 in 2 years?

Answer 1

21%.......................

Answer 2

Using C.I.= A-P
here A=73,205        And P=50,000
Now CI=73,205 - 50,000=23,205
To find the rate (R)
we used CI=P( (1+R/100)^t-1)
23,205=50,000(1+R/100)^2 -1)                      t= 2 years
23205/50,000 = (1+R/100)^2 -1)
23205/50,000 =(1+R/100)^2 - 1
(23205/50000) +1 = (1+R/100)^2
Finding LCM of LHS and Plus the Numerator we get
73205/50,000= (1+R/100)^2
73205x100x100/50000 = (100 + R)^2
R^2 +200R + 10000=73205/5
R^2+200R +10000-14,641=0
R^2+200R -4641=0
which is a Quadratic equation, splitting the middle term
R^2 - 21R+221R - 4641= 0
(R-21)(R+221)=0
Neglecting R= -221
There fore Rate = 21%

Hope this help you.