Question

RS 3560 becomes RS 4272 in 8 years at S.I. What will be the simple interest on Rs 6480 in 14 years at the same rate of interest?

(Answer with explanation and working)

Answer 1

`RS\ 8,748`

Explanation:

we know that

The simple interest formula is equal to

`A=P(1+rt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

step 1

Find the rate of interest

in this problem we have

`t=8\ years\\ P=RS\ 3,560\\ A=RS\ 4,272\\r=?`

substitute in the formula above

`4,272=3,560(1+8r)`

solve for r

`8r=(4,272/3,560)-1`

`r=[(4,272/3,560)-1]/8`

`r=0.025`

convert to percentage

`r=0.025*100=2.5\%`

step 2

What will be the simple interest on Rs 6480 in 14 years at the same rate of interest?

we have

`t=14\ years\\ P=RS\ 6,480\\ A=?\\r=0.025`

substitute in the formula above

`A=6,480(1+0.025*14)`

`A=6,480(1+0.35)`

`A=RS\ 8,748`