SOLUTION: A sum of money amounts to Rs 5200 in 5 years and Rs 5680 in 7 years at simple interest .What was the rate of simple interest charged per annum ?
Question 1039408: A sum of money amounts to Rs 5200 in 5 years and Rs 5680 in 7 years at simple interest .What was the rate of simple interest charged per annum ? Found 2 solutions by Aldorozos, MathTherapy:Answer by Aldorozos(172) (Show Source): You can put this solution on YOUR website! f = p(1+r)^n where f is the future value, p is the present value, r is the interest rate and n is the number of periods
5200 = p (1+r)^5
5680 = p(1+r)^7
From 5200 = p (1+r)^5
we calculate p
p = 5200/(1+r)^5
Similarly we calculate p from
5680 = p(1+r)^7
and we get p = 5680/(1+r)^7
We set the two equations together since both are equal to p
5200/(1+r)^5 = 5680/(1+r)^7
5680/5200 = (1+r)^7 divided by (1+r)^5
(1+r)^2 = 1.0923
Square root of 1.0923 is 1.045
1+r = 1.045
therefore r - 1.045 - 1 = .045 = 4.5%