Compound Interest Practice Test 4

Question : 16 of 40

Marks: +1, -0

Which is more profitable, to invest a certainsum at 7% CI for one year or at 8% SI for 9 months?

Solution:

CI=P(1+7/100)^t-P

=P(107/100)-P

=P(7/100)

SI={P×9×8}/{100×12}=P(6/100)

So it is clear that investment at CI is moreprofitable.

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