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a sum of Rs.8000 generates Rs.1261 as compounded interest in 03 years interest compounded annually. The rate of compound interest is

  • math - ,

    P = Po(1+r)^n

    P = 8000+1261 = 9261.
    Po = 8000.
    n = 1comp./yr. * 3 yrs. = 3 Compounding
    periods.
    r = ?

    8000(1+r)^3 = 9261.
    Divide both sides by 8000:
    (1+r)^3 = 1.157625.
    Take cube of both sides:
    1+r = 1.05
    r = 0.05 = 5% per yr.

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