Question

At what rate percent will be Rs.125000 amount to Rs.145800 in 2 years compounded annually? After how many years it will amount to Rs.157464 at the same rate percent?

Answer 1

A = P (1+R/100)ⁿ , here P is the principle, A is the amount, R is the rate , n is the time
P = Rs 125000, A = Rs 145800, Time n = 2 years
Hence 145800 = 125000(1+R/100)²
145800/125000 = (1+R/100)²
(145800/125000)^1/2 = 1 + R/100
1.08 = 1 + R/100
Or 0 .08 = R/100
R = 8%

Next A = Rs.157464 , P = 125000, R = 8%,
Hence 157464 = 125000(1 + 8/100)ⁿ
Hence from the above the first year interest = (125000 * 8*1)/100 = 10000
And the second year principle will be 125000 + 10000 = 135000
So the second year interest = (135000*8*1)/100 = Rs10,800
So the principle for third year = 135000 + 10,800 = Rs 145800
And the interest of third year = (145800 *8*1)/100 = Rs11664
So the Amount after third year is 145800 + 11664 = Rs157464
Hence the time taken is 3 years.