Find the rate of interest when Rs 1250 amount to Rs 1400 in 3 year
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heya..!!
Your answer..!!
Total interest for two years = 1800 - 1250 - 550
Effective Rate of Interest:
= 550/1250×100 = 44%
Let the Normal Rate of Interest = x%
using the relation A+B+AB/100
x+x+x^2/100= 44
x^2 + 209x - 20x - 4400 = 0
x(x + 200) - 20(x + 220) = 0
(x - 20)(x + 220) = 0
x = 20 or x = -220
But rate of interest can't be negative.
=>x = 20%
A = B = 20
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A = P(1 + r/100)^n
1800 = 1250(1 + r/100)^2
180/125 = (1 + r/100)^2
=>6/5=(1 + r/100)
=>r/100 = 6/5 - 1 = 1/5
=> r = 20%
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