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Question
At what rate of interest per annum will a sum of Rs. 62,500 earn a compound interest of Rs. 5,100 in one year? The interest is to be compounded half yearly.
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Solution
r = ? P = 62,500 C.I = A - P = 5100
A = 5100 + 62500
= 67,600
A = P`(1+ r/200)^(2n)`
`67600 = 62500 (1 + r/200)^2`
= `(1 + r/(200 ))^(2) = [67,600]/[62,500]`
= `(26/25)^2`
= `1 + r/200 = 26/25`
= `r/200 = 26/25 -1`
= `1/5`
`r =200/25`
= 8%
= r = 8
The rate of interest is 8%.
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