A sum invested at 5% simple interest p.a. grows to Rs.504 in 4yrs. The same amount at 10% simple interest p.a. in 21/2 yrs will grow to:
Question
A sum invested at 5% simple interest p.a. grows to Rs.504 in 4yrs. The same amount at 10% simple interest p.a. in 21/2 yrs will grow to:
Solution
To find the amount that will grow to in 2.5 years at 10% simple interest, we can use the formula:
A = P(1 + rt)
Where: A = Final amount P = Principal amount (initial investment) r = Interest rate per year t = Time in years
Given that the principal amount is the same in both cases, we can set up the equation:
504 = P(1 + 0.05 * 4)
To find the principal amount, we can rearrange the equation:
P = 504 / (1 + 0.05 * 4)
P = 504 / 1.2
P = 420
Now, we can calculate the amount that will grow to in 2.5 years at 10% simple interest:
A = 420(1 + 0.10 * 2.5)
A = 420(1 + 0.25)
A = 420(1.25)
A = 525
Therefore, the same amount at 10% simple interest per annum in 2.5 years will grow to Rs.525.
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