Question

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

Answer 1

Compound interest accumulation factor :

P(1 + i)ⁿ = Amount

Amount = 35000 + 7875 = 42875

P = 35000

i = interest

n = 3

Doing substitution :

35000(1 + i)³ = 42875

(1 + i)³ = 42875/35000

(1 + i)³ = 1.225

1 + i = 1.06999

i = 1.06999 - 1

i = 0.06999

i = 0.06999 × 100 = 6.999%