Interest
Here's how to calculate the simple interest rate:
Let:
- P = Principal amount
- r = Rate of interest per year
- t = Time in years
We know that the amount doubles in 5 years. So, the amount (A) after 5 years will be 2P.
The formula for simple interest is: A = P + (P * r * t)
Substituting the given values: 2P = P + (P * r * 5)
Simplifying the equation: 2P - P = 5Pr P = 5Pr
Divide both sides by P: 1 = 5r
Solving for r: r = 1/5 = 0.2
To express this as a percentage, multiply by 100: r = 0.2 * 100 = 20%
Therefore, the rate of simple interest is 20% per year.
To calculate the compound interest, we can use the formula:
A = P (1 + R/100)^T
Where:
- A = the future value of the investment/loan, including interest
- P = the principal investment amount (the initial deposit or loan amount)
- R = the annual interest rate (as a percentage)
- T = the time the money is invested or borrowed for, in years
In this case:
- P = Rs 5000
- R = 8%
- T = 3 years
So, A = 5000 * (1 + 8/100)^3
A = 5000 * (1 + 0.08)^3
A = 5000 * (1.08)^3
A = 5000 * 1.259712
A = Rs 6298.56
Compound Interest = A - P
Compound Interest = 6298.56 - 5000
Compound Interest = Rs 1298.56
Therefore, the compound interest is Rs 1298.56.