ULOU.10. On a certain sum of money, lent out at CI.,interests for firs

1.	ULOU.10. On a certain sum of money, lent out at CI.,interests for first second and third years are1,500; 1,725 and 2,070 respectively.Find the rate of interest for the (i) second year(ii) third year.
Answer» The compound interest accumulation formula is given by : A = P(1 + i)^n For the first year : P(1 + i) = 1500 P = (1500)/(1 + i) Second year : P(1 + i)² = 1725 P = 1725/(1 + i)² We have that the principle in the first year is equal to the principle in the second and the third year. Equating the two : 1725/(1 + i)² = 1500/(1 + i) 1725/1500 + (1 + i)²/(1 + i) 1.15 = 1 + i i = 1.15 - 1 i = 0.15 i = 15% Interest rate is thus 15%.

ULOU.10. On a certain sum of money, lent out at CI.,interests for first second and third years are1,500; 1,725 and 2,070 respectively.Find the rate of interest for the (i) second year(ii) third year.

Answer»

The compound interest accumulation formula is given by :

A = P(1 + i)^n

For the first year :

P(1 + i) = 1500

P = (1500)/(1 + i)

Second year :

P(1 + i)² = 1725

P = 1725/(1 + i)²

We have that the principle in the first year is equal to the principle in the second and the third year.

Equating the two :

1725/(1 + i)² = 1500/(1 + i)

1725/1500 + (1 + i)²/(1 + i)

1.15 = 1 + i

i = 1.15 - 1

i = 0.15

i = 15%

Interest rate is thus 15%.