The problem involves calculating the rate of compound interest given the interest earned in two consecutive years.
Understanding Successive Year Interest
In compound interest, the interest earned in one year is added to the principal for the next year. The difference between the interest amounts of two successive years represents the interest earned on the previous year's interest.
Calculating the Interest Difference
- Interest in the first year (I1) = ₹225
- Interest in the second year (I2) = ₹236.25
- Difference in interest = I2 - I1 = ₹236.25 - ₹225 = ₹11.25
Determining the Rate of Interest
The difference (₹11.25) is the interest calculated on the first year's interest (₹225) at the given rate (R). We can express this using the simple interest formula for one year:
Interest = Principal × Rate / 100
In this case:
₹11.25 = ₹225 × R / 100
Solving for Rate (R)
Rearrange the formula to solve for R:
R = (₹11.25 × 100) / ₹225
R = 1125 / 225
R = 5
Therefore, the rate of interest is 5%.
Similar Questions
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Important Questions from Compound Interest
At what rate percent per annum will Rs. 7200 amount to Rs. 7938 in one year, if interest is compounded half yearly?
What is the compound interest (in Rs.) on a sum of Rs. 8192 for \(1 \frac{1}{4}\) years at 15% per annum, if interest is compounded 5-monthly ?
What is the difference (in Rs.) between the interests on Rs. 50,000 for one year at 8% per annum compounded half yearly and yearly?
A sum of money becomes Rs. 11,880 after 4 years and Rs. 17,820 after 6 years on compound interest, if the interest is compounded annually. What is the half of the sum (in Rs.)?
A sum invested at compound interest amounts to Rs. 7,800 in 3 years and Rs. 11,232 in 5 years. What is the rate per cent?
