Question

Find the annual rate of interest.

Principal = 7800 rupees
Period = 7 years
Total amount = 11349 rupees
Annual rate of interest =

Answer 1

The annual rate of interest equals 6.5%

Explanation:

Interest: 11349 - 7800 = !! 2549 !!

3549 ÷ 7 = 507 rupees.

100 = 507

----- ------

100 7800

x = 507 x 100

----------------

7800

= 6.5 %

Answer 2

5.503%

Explanation:

Assuming that the interest earned is of compounding nature(annual compounding):

`A=P(1+i)^t` #where t=time, A=Total earned, P=Principal.

#We substitute our known values in the equation to get:

`11349=7800(1+I)^7\\\\1.455=(1+i)^7\\\\(1+i)=1.455^{(1)/(7)}=1.05503\\\\i=1.05503-1\\\\i=0.05503`

Hence the annual rate of interest is 5.503%