A sum of money becomes 8/5 of itself in 5 years at certain rate of simple interest. Find the rate of interest.
To find the rate of interest, we need to use the formula for simple interest, which is:
Simple Interest = Principal * Rate * Time
Given that the sum of money becomes 8/5 of itself in 5 years, we can write the equation as:
8/5 = 1 + (Principal * Rate * Time)
Simplifying the equation, we get:
8/5 = 1 + Principal * Rate * 5
Now, let's isolate the interest rate and solve for it:
8/5 - 1 = Principal * Rate * 5
3/5 = Principal * Rate * 5
Rate = (3/5) / (Principal * 5)
Since we don't have the principal mentioned in the question, we cannot directly calculate the rate of interest. We need more information about the principal or the final amount to determine the rate.
how did you derive the formula? please can you explain? I really need to understand this.
(1+5r) = 1.6
5r = .6
r = .12 or 12%
Let the principal money be 1. Then compond money = 1 *8/5 = 8/5
Now
Interst = compound - principal = 8/5 - 1 = 3/5
Now formula for interst
Interest = principal*rate*time/100
= 3/5=1*rate*5/100
Rate= 12%