(1+5r) = 1.6
5r = .6
r = .12 or 12%
A sum of money becomes 8/5 of itself in 5 years at certain rate of simple interest. Find the rate of interest.
3 answers
how did you derive the formula? please can you explain? I really need to understand this.
Let the principal money be 1. Then compond money = 1 *8/5 = 8/5
Now
Interst = compound - principal = 8/5 - 1 = 3/5
Now formula for interst
Interest = principal*rate*time/100
= 3/5=1*rate*5/100
Rate= 12%
Now
Interst = compound - principal = 8/5 - 1 = 3/5
Now formula for interst
Interest = principal*rate*time/100
= 3/5=1*rate*5/100
Rate= 12%