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2014-12-22T04:30:06+05:30

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Is it simple interest or  compound interest ?

For the amount  Rs 5, 750 -  in how many years ?   

Let us say n years.

1. Simple interest case

       Rs 6, 500 =  P ( 1 + r * 3 )
        Rs 5, 750 =  P ( 1 + r * n )

          750 = P * r * (3 - n)
          6,500/5,750 = (1+3r) / (1+n r)
            6500 + 6500 n r = 5750 + 3 * 5750 * r
           750 = r ( 1725 - 650 * n )

             r = 30 / ( 69 - 26 n )    = rate of interest
            P = 750 /  [ (3-n) r ]  = 25 (69 - 26 n) / (3-n)

  2. Compound interest,
  the number of years after which  the amount is Rs 5, 750 =  n years

     6,500 = P ( 1 + r )^3
     5750 = P ( 1 + r)^n

         6500 / 5750 = (1+r)^(3-n)
    =>        r  = - 1 +  [ 1/(3-n) ] * Log (650/575)         
     =>        P = 6,500 / (1 +r )^3

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