at what rate of compound interest will rs 576 amount to rs 625 at the end of 2 years?
Answers
Concept:
The interest that is paid on both principal and interest and is compounded on a regular basis is known as compound interest. The interest is calculated for the new principal at regular intervals when the accumulated interest and the current principal are combined.
Compound Interest = Interest on Principal + Compounded Interest at Regular Intervals
Amount= Principle +Interest
The formula of Compound interest:
A = P(1 + r/100)^t
A= represents the new principal sum or the total amount of money after the compounding period
P= represents the original amount
r= annual interest rate
t= represents the number of years
Given:
Principle= 576
Amount= 625
Time= 2 years
Find:
We have to find the rate of Compound Interest at the end of 2years.
Solution:
Apply the formula of Compound interest:
A = P(1 + r/100)^t
625= 576 (1 + r/ 100)^2
625/ 576= (1 + r/ 100)^2
(25/24)^2= (1 + r/ 100)^2
25/24= 1 + r/ 100
25/24-1 = r/ 100
100/ 24 = r
So, r= 25/4 %
Hence, 25/4 % is the rate of compound interest at the end of 2 years.
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