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Understanding Compound Interest Using Simple Interest (Rate Compounded Annually)

Alok paid Rs ...

Question

Alok paid Rs 6720 to clear a debt of Rs 6000 to the bank after 1 year 6 months. What is the rate of intrest charged by the bank ?

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Solution

Interest = 6720-6000
= 720

The duration is 1year 6 months

ie 1+1/2=3/2 year

Therefore
Rate= 720×100/(6000×3/2)

Therefore
= 72000/9000
= 8℅

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