Mathematics
If the amounts of two consecutive years on a sum of money are in the ratio 20 : 21, find the rate of interest.
Compound Interest
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Answer
Given: The amounts of two consecutive years on a sum of money = 20 : 21.
Let the amount at the end of first year be 20x and the amount at the end of second year be 21x.
Compound interest for second year:
P = 20x, R = r %, T = 1 years, A = 21x
A = P
⇒ 21x = 20x
⇒
⇒
⇒
⇒
⇒ r = = 5 %
Hence, the rate of interest = 5%.
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