SOLUTION: Deepa invested a sum of money from March 2011 to March 2016 at the rate of 12 percent p.a. If the interest received is rs. 1620, find the sum.

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Question 1190562: Deepa invested a sum of money from March 2011 to March 2016 at the rate of 12 percent p.a. If the interest received is rs. 1620, find the sum.
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
the formula to use is:

f = p * (1 + r) ^ n
f is the future value
p is the present value
r is the interest rate per time period
n is the number of time periods.

an associated formula is:

i = f - p
i is the interest
f is the future value
p is the preswent value

you are given that i = 1620 and yoou are given that r = .12 and you can find the value of n because 2016 minus 2011 = 5.

the formula for f becomes:

f = p * 1.12 ^ 5

the formula for i becomes:

i = f - p which is equal to p * 1.12 ^ 5 - p

this can be factored to get:

i = f - p = p * (1.12 ^ 5 - 1)

since i = 1620, the formula becomes:

1620 = p * (1.12 ^ 5 - 1)

solve for p to get:

p = 1620 / (1.12 ^ 5 - 1) = 2125.031381.

you can verify that this is correct, because:

f = p * 1.12 ^ 5 becomes f = 2125.031381 * 1.12 ^ 5 which becomes f = 3745.031381.

i = f - p becomes 3745.031381 minus 2125.031381 = 1620 which is the interest you were given.

let me know if you have any questions.

theo