Question

Find the time, in years, in which Rs. 4,000 will produce Rs. 630.50 as compound interest at 5 per cent p.a. interest being compounded annually.

Answer 1

Ci= p{ $(1+\frac{r}{100}{)}^n$ - 1}
630.50= 4000{ $(1+\frac{5}{100}{)}^n$ -1}
$\frac{630.50}{4000}$ = $\frac{21}{20}{)}^n$ -1
$\frac{4630.5}{4000}$= $\frac{21}{20}{)}^n$
$\frac{9261}{8000}$=$(\frac{21}{20}{)}^n$
$\left({\frac{21}{20}}^3\right)=(\frac{21}{20}{)}^n$
n=3 yr