Question

Determine the rate of interest for a sum that becomes $\frac{49}{36}$ times of itself in $2$ years compounded annually.

Answer 1

Let the Principal be $P$

so that Amount after 2 years will be $A=\frac{49}{36}P$

and we know that, $A=P(1+r{)}^t$ for C.I. compounded Annually

$\frac{49}{36}P=P(1+r{)}^2\Rightarrow (\frac{7}{6}{)}^2=(1+r{)}^2\Rightarrow \frac{7}{6}=1+r\Rightarrow r=\frac{1}{6}$