If the amount received at the end of the 2nd and 3rd year at Compound Interest on a certain Principal is Rs 28090 and Rs 29775.4 respectively, what is the rate of interest?
- A6 percent
- B3 percent
- C12 percent
- D10 percent
Solution & Step-by-step Explanation
In compound interest, the amount at the end of the 2nd year becomes the principal for the 3rd year.
Interest earned in the 3rd year:
Interest=A
3
−A
2
=29775.4−28090=1685.4
The interest is earned on the 2nd year amount (28090):
Rate of Interest (R)=(
A
2
Interest
)×100%
R=(
28090
1685.4
)×100%=
28090
168540
=6%
Interest earned in the 3rd year:
Interest=A
3
−A
2
=29775.4−28090=1685.4
The interest is earned on the 2nd year amount (28090):
Rate of Interest (R)=(
A
2
Interest
)×100%
R=(
28090
1685.4
)×100%=
28090
168540
=6%