talaangoshtari wrote:A sum of money amounts to $49440 in three years and $50400 in five years at the same interest rate. Find the rate of interest per annum.
A.8
B.9
C.10
D.11
E.12
The problem should make it clear that interest accrues ONLY on the original investment.
(amount after 5 years) - (amount after 3 years) = 50400 - 49440 = $960.
Since $960 is earned in the 2 years between the 3rd and 5th years, the amount of interest earned each year = 960/2 = $480.
Since the account contains $49440 after earning $480 per year for 3 years, the original investment = 49440 - (3*480) = 48000.
Since $48000 earns $480 each year, the annual interest rate is [spoiler]1%[/spoiler].
The correct answer is not among the 5 options.
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