Question

The ratio of the amount for two years under compound interest annually and for one year under simple interest is $6:5$. When the rate of interest is same, then find the value of rate of interest?

Answer 1

Let the principle = P, Rate = x% per annume

$\Rightarrow \frac{P(1+\frac{r}{100}{)}^2}{P(1+\frac{r\times 1}{100})}=\frac{6}{5}$

$(1+\frac{r}{100})=\frac{6}{5}$

$\Rightarrow \frac{r}{100}=\frac{6}{5}-1=\frac{1}{5}$

$r=\frac{100}{5}=20$

$\therefore$ rate of interest = 20%