Question

Given that the interest is only earned a principle, if an investment of $Rs.1000.00$ amount to $Rs.1440.00$ in two years, then what is the rate of interest earned?

Answer 1

Step $1$: Find the value of interest.

Let the rate of interest is $r\%$ per annum.

We know that if $P$ be any principle, $t$ be the time of investment, $r\%$ be the rate of interest and $I$ be the interest earned, then

$I=\frac{Ptr}{100}$, where $P$ is the principle and $r$ is rate of interest in $\%$ and $t$is time in years.

Given that $Rs.1000$ amounts to $Rs.1440$

Then interest $=Rs(1440-1000)$

$=440$

Step $2$: Find the rate of interest.

Using the formula given in Step $1$ for $t=2years$, we get

$440=\frac{1000\times 2\times r}{100}$

$44000=2000r$

$22=r$

Hence, the rate of interest earned is $22\%$.