Question

Nishant deposits ₹ 35,000 in a bank for 3 years on a certain rate of interest. If he gets an interest of ₹ 7875, what is the rate of interest?

Answer 1

Formula :

Accumulated amount = P (1 + i) ⁿ

P = The deposited amount

i = The interest rate

Doing the substitution :

Accumulated amount = principal amount + interest earned

= 35000 + 7875 = 42875

n = 3 years

35000 × (1 + i) ³ = 42875

(1 + i)³ = 42875 / 35000

(1 + i) ³ = 1.225

1 + i = (1.225) ^ 1/3

1 + i = 1.069987

i = 1.069987 - 1

i = 0.069987

0.069987 × 100 = 6.9987%