1.

What is the rate of interest, if simple interest earned on a certain sum for the 3rd year is Rs. 1,750 and compound interest earned for 2 years is Rs. 3622.5?1). 82). 93). 104). 7

Answer»

Simple interest for 3rd year, the duration is only 1 year

Let the rate of interest be 100r

⇒ Simple interest = (PRINCIPAL × rate × 1)/100

⇒ 1750 = Principal × r----(1)

Also,

⇒ Compound interest = Principal × [(1 + Rate/100)TIME - 1]

⇒ 3622.5 = Principal × [(1 + r)2 - 1]

⇒ 3622.5 = Principal × [r2 + 2r]

⇒ 3622.5 = Principal × r × (r + 2)----(2)

Dividing equation (2) by (1), we GET,

⇒ 3622.5/1750 = r + 2

⇒ r = 0.07

∴ Rate = 100r = 7%


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