Question

A certain sum amounts to Rs. 5,292 in two years and Rs. 5,556.60 in three years, interest being compounded annually. Find:

(i) the rate of interest

(ii) the original sum.

Answer 1

(i)Amount in two years= Rs5,292

Amount in three years= Rs5,556.60

Difference between the amounts of two successive years

= Rs5,556.60 - Rs5,292= Rs264.60

Rs264.60 is the interest of one year on Rs5,292

Rate of interest= Rs%= %= 5%

(ii) Let the sum of money= Rs100

Interest on it for 1^st year= 5% of Rs100= Rs5

Amount in one year= Rs100+ Rs5= Rs105

Similarly, amount in two years= Rs105+ 5% of Rs105

= Rs105+ Rs5.25

= Rs110.25

When amount in two years is Rs110.25, sum = Rs100

When amount in two years is Rs5,292, sum = Rs

= Rs4,800