Question

Calculate the rate of interest for which a sum of rs.7200 give a compound interest of 1198.08 in 2 years

Answer 1

Given:

A sum of Rs.7200 gives a compound interest of 1198.08 in 2 years.

To find:

The rate of interest

Solution:

According to the question, the interest is compounded annually.

Principal = Rs. 7200,

Amount = Rs. 7200 + Rs. 1198.08 = Rs. 8398.08

Time period = 2 year

$A = P(1+\frac{R}{100})^{T}$

• $8398.08 = 7200(1+\frac{R}{100})^{2}$
• $\sqrt{\frac{8398.08}{7200}} =(1+\frac{R}{100})$
• $\sqrt{\frac{1049.76}{900}} =(1+\frac{R}{100})$
• $\frac{32.4}{30}=(1+\frac{R}{100})$
• $\frac{324}{300}=(1+\frac{R}{100})$
• $1+\frac{24}{300}=(1+\frac{R}{100})$
• $1+\frac{8}{100}=(1+\frac{R}{100})$

on comparing we get:

R = 8%

The rate of interest is 8%