Kushi invested a sum of money at compound interest. In 4 years it amounted to Rs. 5400 and in 5 years to Rs. 5670. The interest rate per annum is
Question
Kushi invested a sum of money at compound interest. In 4 years it amounted to Rs. 5400 and in 5 years to Rs. 5670. The interest rate per annum is
Solution
To find the rate of interest, we first need to understand that the difference in the amounts after 4 years and 5 years is actually the interest of the 5th year.
So, the interest for the 5th year is Rs. 5670 - Rs. 5400 = Rs. 270.
Now, we know that the amount after 4 years is Rs. 5400. This is the principal for the 5th year.
The formula to calculate the interest is:
Interest = (Principal * Rate * Time) / 100
We can rearrange this formula to find the rate:
Rate = (Interest * 100) / (Principal * Time)
Substituting the values we have:
Rate = (270 * 100) / (5400 * 1) = 5%
So, the interest rate per annum is 5%.
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