Question
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Compound interest of Rs. 21,515 is received on sum of Rs. 65,000 in a period of three years.
What was the rate of interest on which the sum was being compounded annually?
Compound interest of Rs. 21,515 is received on sum of Rs. 65,000 in a period of three years.
What was the rate of interest on which the sum was being compounded annually?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFGiven data:
P (Principal amount) = Rs. 65,000
CI (Compound Interest) = Rs. 21,515
t (time in years) = 3 years
Concept: Compound Interest formula is A = P(1 + r/n)(nt)
Step-by-step solution:
A (Final amount) = P + CI = Rs. 65,000 + Rs. 21,515 = Rs. 86,515
We know that the formula for Compound Interest is A = P(1 + r/n)(nt)
Since compounding is done annually, n = 1. Substituting the values in the equation,
⇒ 86,515 = 65,000 × (1 + r)3
⇒ (1 + r)3 = 86,515/65,000 = 1.331769
⇒ 1 + r = (1.331769)(1/3)
⇒ r = (1.331769)(1/3) - 1
Hence, the rate of interest is r × 100 = 10% (approx).
Last updated on Jul 7, 2025
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