Question

In what period of time will rupees 12000 yield rupees 3972 as compound interest at 10% if compounded on yearly basis

Answer 1

Let’s assume rate of interest is “r”

50000(1+r)^2 - 50000 = 5582.25 (compound interest in two years)

(1+r)^2 - 1 = (5582.25 / 50000)

(1 + r) ^ 2 = 0.111645 + 1

(1 + r) = sqrt(1.111645)

(1 + r) = 1.05434

r = 0.05434

A sum of 50000 will yield a compound interest of 5582.25 in two years at a rate of 5.434% per annum.