Question 123

A sum of money put out at compound interest amounts to Rs. 16900 in 2 years and to Rs. 17576 in 3 years. Find the rate of interest per annum.

Solution

Let x be the principal amount and r be the compound interest.

The amount after first year =$$x + xr$$

the amount after second year=$$(x + xr) +(xr + xr^{2})=x+2xr + xr^{2}=x(1+r)^{2} $$=16900 -(1)

Similarly, the amount after third year =$$x(1 + r)^{3}$$= 17576 -(2)

dividing 2 by 1 we get,

1+r=1.04

r=.04

Thus the interest is 4%.

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