Finding Rate of Interest
For finding rate of interest P. a , we use the formula of amount only.A = ( 1 + r)n
Where, A = amount
P = Principal
r = rate in percent
n = time in years.
Examples on finding rate of interest:
1) At what rate percent P.a , compound interest will $ 10,000 amount to $ 13,310 in three years?
Solution :
Here, P = $ 10,000 ; A = $ 13,310 ; n = 3 years
A = P ( 1 + r) n
13,310 = 10,000( 1 + r ) 3
13,310/10,000 = ( 1 + r ) 3
1331/1000 = ( 1 + r) 3
( 11/10) 3 = ( 1 + r) 3
As the exponents are same the bases are equal.
11/10 = 1 + r
11/10 – 1 = r
( 11 – 10)/10 = r
1/10 = r
As rate is in percent so, r = (1/10) x 100
Rate = 10 % P.a.
2) At what rate percent compound interest P.a. will $640 amount to $ 774.40 in 2 years ?
Solution :
Here, P = $ 640 ; A = $ 774.40 ; n = 2 years
A = P ( 1 + r) n
774.40 = 640 ( 1 + r ) 2
774.40 /640 = ( 1 + r ) 2
77440 /64000 = ( 1 + r) 2
( 88/80) 2 = ( 1 + r) 2
(11/10) 2 = ( 1 + r) 2
As the exponents are same the bases are equal.
11/10 = 1 + r
11/10 – 1 = r
( 11 – 10)/10 = r
1/10 = r
As rate is in percent so, r = (1/10) x 100
Rate = 10 % P.a.
Compound Interest ( CI )
• Find Compound Interest when interest is compounded Half yearly
• Find Compound Interest when interest is compounded Quarterly
• Find CI when interest is compounded annually but Rates are different
• Finding Principal
• Finding Time Period of Investment
• Finding Rate of Interest