Question description

Question

Balu borrowed Rs.25,000 from Rathinam but could not repay the amount in a period of 5 years. Accordingly, Rathinam demands now Rs.35,880 from Balu. At what percent p.a. compound interest did Rathinam lend his money

Answer 1

Try the other way

(35880/25000)^(1/5)-1 = 7.5%

Answer 2

Assuming the funds were lent at the beginning of the first year, and repayment demanded at the end of year 5, that rate would be 7.5%

Answer 3

35880 = 2500(1 + r)²

14.352 = (1 + r)²

3.7884 = 1 + r

2.788r = r