Word Problem 5
Problem 5: If 16% annual interest is applied on a certain investment, at the end of the 8th month the amount was 1716 rupees. What is the amount of investment ?
Solution:
Here,
Rate of Interest = 6%
Term on annual basis = 8/12 ( To convert 8 months into yearly term we divide months by months in a year i-e 12, this is because Term is always taken in years)
Suppose initial amount P = ‘x’
we know that Interest is calculated by the relation;
Put values,
We also know formula for amount at the end of term is ;
But we are given in the question that amount at the 8th month is Rs 1716 i-e A= 1716 Rs
so,
So, initial amount was Rs 1650/-