SOLUTION: A sum of money amounts to ₦5,280 in 4 years at a certain rate of simple interest. If the same amount is invested at a 2% higher interest rate, it amounts to ₦5,520 in the same

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Question 1210268: A sum of money amounts to ₦5,280 in 4 years at a certain rate of simple interest. If the same amount is invested at a 2% higher interest rate, it amounts to ₦5,520 in the same time.
Find:
- The principal
- The original rate of interest
Found 2 solutions by Edwin McCravy, ikleyn:
Answer by Edwin McCravy(20055)   (Show Source): You can put this solution on YOUR website!

Answer by ikleyn(52781)   (Show Source): You can put this solution on YOUR website!
.
A sum of money amounts to ₦5,280 in 4 years at a certain rate of simple interest.
If the same amount is invested at a 2% higher interest rate, it amounts to ₦5,520 in the same time.
Find:
- The principal
- The original rate of interest
~~~~~~~~~~~~~~~~~~~~~~~~ 

Let A be the amount (the same in both cases).
Let r be the original interest (in the decimal form).


Then from the problem, we have these two equations

    5280 = A*(1+4r),           (1)

    5520 = A*(1+4(r+0.02)).    (2)


Divide equation (1) by equation (2).  You will get

     = ,

     = 

    22*(1.08+4r) = 23*(1+4r)

    23.76 + 88r = 23 + 92r

    23.76 - 23 = 92r - 88r

        0.76   =     4r

           r   =      = 0.19.


Then from equation (1)

    A =  = 3000.


ANSWER.  The principal was N3000.  The annual interest was 0.19, or 19%.

Solved.



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