Compound Interest Practice Test 2

Question : 31 of 40

Marks: +1, -0

A sum is borrowed at 25% p.a. compound interest. What is the ratio of increase in amount at 3rd year to 5th year.

Solution:

{P(1+r/100)^3}/{P(1+r/100)^5}=1/({1+r/100})^2

=1/({1+25/100})^2=16/25

So, the required ratio = 16 : 25

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