Question
A man invested $4,800 in a scheme offering compound
interest compounded annually. If the difference between the interest earned in the 2nd year and the 1st year is $48, what is the rate of interest?Solution
Let the rate of interest be R% Interest for the 1st year = 4800×R/100 = 48R Interest for the 2nd year = (4800+48R) × R/100 The difference between the 2nd-year interest and 1st-year interest is $48: (4800+48R) ×R/100 − 48R = 48 0.48R² =48 R=10%
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