A certain sum of money at compound interest becames Rs7,396 in 2 years and Rs7950.70 in 3 years.Find the rate of interest.
Here, use the copound interest formula,
...(1)
Where,
P = principal amount (the initial amount you borrow or deposit)
r = annual rate of interest (as a decimal)
t = number of years the amount is deposited or borrowed for.
A= amount of money accumulated after n years, including interest.
n = number of times, the interest is compounded per year
Now, for the given question,
Let the principal be x and rate of interest be y
So, when the money is deposited for 2 years,
A = Rs 7396
t = 2 years
n = 1
Substituting the above values in equation (1), we get
Next, when the money is deposited for 3 years,
A = Rs 7950.70
t = 3 years
n = 1
Substituting the above values in equation (1), we get
Divide equation (3) by equation (2). So, we get
Therefore, the rate of interest is 0.075
...(1)
Where,
P = principal amount (the initial amount you borrow or deposit)
r = annual rate of interest (as a decimal)
t = number of years the amount is deposited or borrowed for.
A= amount of money accumulated after n years, including interest.
n = number of times, the interest is compounded per year
Now, for the given question,
Let the principal be x and rate of interest be y
So, when the money is deposited for 2 years,
A = Rs 7396
t = 2 years
n = 1
Substituting the above values in equation (1), we get
Next, when the money is deposited for 3 years,
A = Rs 7950.70
t = 3 years
n = 1
Substituting the above values in equation (1), we get
Divide equation (3) by equation (2). So, we get
Therefore, the rate of interest is 0.075