# 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 ?

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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/-

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