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Mathematics

The amount at compound interest which is calculated yearly on a certain sum of money is ₹1250 in one year and ₹1375 after two years. Calculate the rate of interest.

Compound Interest

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Answer

Given,

Amount after one year = ₹1250,

Amount after second year = ₹1375.

Difference = ₹1375 - ₹1250 = ₹125.

So, ₹125 is the interest on ₹1250 for 1 year.

We know that,

R=S.I.×100P×T=125×1001250×1=10%.R = \dfrac{S.I. \times 100}{P \times T} \\[1em] = \dfrac{125 \times 100}{1250 \times 1} \\[1em] = 10\%.

Hence, rate of interest = 10%.

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