Find the sum that yields an interest of ?170 after two years at the rate of 12.5% p.a. interest being compounded annually.

Dear student,
CI=Rs170Time=2yearsRate=12.5%we know CI=A-P170=P1+12.51002-P170=P1+12.51002-1170=P1+12510002-1170=P1+182-1170=P982-1170=P8164-1170=P81-6464170=P1764170×6417=P10×64=PP=Rs 640Thus the required sum is Rs 640
Regards

  • 5
A = Rs 170 future value
t = 2 years
r = 12.5% annual interest rate
m = 1 number of compounding period per year
n = 2 the number of compounding periods
i = r/m = 12.5% interest per period
P = the principal
A = P(1 + i)^n
P = A/(1 + i)^n
P = 170/(1 + 0.125)^2
P = 170/1.265625
P = Rs 134.321

the sum that yield an amount of rs.170 after 2 years at 12.5% p.a. interest being compounded annually is Rs 134.321.
  • -2
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