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the annual compound interest on a sum of money in 2 years and 3 years are rs 210 and 331 respectively find the rate of interest and principal​?

User Chubby Boy
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Final answer:

To find the rate of interest and principal given the compound interest for 2 and 3 years, we can set up two equations and solve them simultaneously using the compound interest formula, where the future value minus the principal gives us the compound interest for each year.

Step-by-step explanation:

The question asks us to find the rate of interest and the principal amount when the compound interest on a sum of money for 2 years is Rs 210 and for 3 years is Rs 331.

Let's denote the principal as 'P' and the annual interest rate as 'r'. According to the compound interest formula:


  • Future Value after n years = P × (1 + r)^n

  • Compound Interest after n years = Future Value - Principal

After 2 years, the compound interest is Rs 210, so:

P × (1 + r)^2 - P = 210

And after 3 years, the compound interest is Rs 331, so:

P × (1 + r)^3 - P = 331

Now, we set up two equations based on the information provided and solve them simultaneously to find 'P' and 'r'.

User GrowingBrick
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