Business mathematics and statistics

Question

The present worth of a bill due at the end of 4 years is rs575 and if the bill were due at the end of 2 1/2 tears its present worth would be rs 620 fund the rate per cent

Answer 1

A=575e^4r

A=620e^2.5r

0=620e^2.5t - 575e^4r

620e^2.5r = 575e^4r

620/575= e^1.5r

e^1.5r=124/115

1.5r=ln(124/115)

r=[ln(124/115)]/1.5

= .050233 = about 5% interest rate