Answer to Question #198887 in Financial Math for Abdul waqas

Question

i) If Rs.64 amount to Rs.83.20 in 2 years, what will Rs.86 amount to in 4 years at the same rate 

of simple interest?

Answer 1

Simple Interest

$$I=Prt$$

$I=$ Interest

$P=$ Principal (Initial Value)

$r=$ Interest Rate

$t=$ time (years)

$r=$ const

If Rs.64 amount to Rs.83.20 in 2 years

$$P=Rs.64, t=2\ years$$

$$Rs.83.20-Rs.64=Rs.19.20$$

$$r=\dfrac{Rs.19.20}{Rs.64\times2}=0.15 (15\%)$$

Given $P_{new}=Rs.86, r=0.15, t_{new}=4\ years$

$$I_{new}=P_{new}rt_{new}$$

$$I_{new}=Rs.86(0.15)(4)=Rs.51.60$$

$$A_{new}=P_{new}+I_{new}$$

$$=Rs.86.00+Rs.51.60=Rs.137.60$$

$Rs.86$ amount amount to in 4 years at the same rate of simple interest will be $Rs.137.60.$