Compound Interest Practice Test 1

Question : 25 of 40

Marks: +1, -0

A certain sum of money is lent at 25% p.a.compound interest. What is the ratio of increase in amount at 5th year and 6th year?

Solution:

{P(1+r/100)^5}/{P(1+r/100)^6}

=1/{1+r/100}

=100/{100+r}

=100/125=4/5

So, the required ratio is 4 : 5.

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