Question

The interest is supposed compound unless the contrary is state.
A person borrows $672$ pounds to be repaid in $5$ years by annual instalments of $120$ pounds; find the rate of interest, reckoning simple interest.

Answer 1

Principal $=672$

Amount paid $=6\times 120=720$

Interest $=720-672=48$

Simple Interest $=\frac{PRT}{100}$

$\Rightarrow 48=\frac{672\times R\times 5}{100}$

$\Rightarrow R=1.43\text{\%}$