Question

Ram invested Rs. 25,000 at a certain rate of simple interest per annum. Ram's investment becomes Rs. 75,000 in a period of 9 years. In how many years, Ram's investment will be Rs. 2,25,000?

Answer 1

Concept:

Simpl ineterest= $P(1+rt)$

Given:

Principle balance= p= 25000

Time= t= 9 years

To find:

Rate = r

Years of increasing investment

Solution:

We know the formula of simple interest is $S.I.=P(1+rt)$

In this question, the rate, r, is not given to us. So first, we will calculate the rate

So if we put the values in the formula we can determine the rate at which the interest is charged

$S. I.= P(1+rt)\\75000=25000(1+r*9)\\\frac{75000}{25000}=(1+9r)\\3=1+9r\\ 3-1=9r\\2=9r\\r=0.22$

or we can say, 22.2%

Now, since we have determined the rate, we can determine after how many years the interest increased

$N =IOOxl/PR\frac{100*I}{Pr} \\= \frac{100*200000}{25000*22.2} = 36 yrs.$

∴After 36 years, the interest amount increased to 2,25,000.

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