What rate of interest to produce 22,500 as interest from an invesment of 8,50,000 in three years
compounded annuallly?
8,500,000+22500=8500000(1+i)^3
solve for intrest rate i.
Simple interest rate
To find the rate of interest, we can use the formula:
Interest = Principal * Rate * Time
We are given:
Principal = Rs. 8,50,000
Interest = Rs. 22,500
Time = 3 years
Rearranging the formula, we have:
Rate = Interest / (Principal * Time)
Substituting the given values, we get:
Rate = 22,500 / (8,50,000 * 3)
Calculating this, we find:
Rate = 22,500 / 25,50,000
Simplifying, Rate = 0.0088235
To express this as a percentage, we multiply by 100:
Rate = 0.0088235 * 100
Rate ≈ 0.88%
Thus, the rate of interest to produce Rs. 22,500 as interest from an investment of Rs. 8,50,000 in three years is approximately 0.88%.