A sum was invested at simple interest, and it became (132/115) times of what it had amounted to in 2 years when invested for 5 years. What is the rate of interest?
Show answer & explanation
Correct answer: D
Explanation
Given:
Time₁ = 2 years
Time₂ = 5 years
A₅ = (132/115) A₂
By the formula:
A = P(1 + rt/100)
A₂ = P(1 + 2r/100)
A₅ = P(1 + 5r/100)
P(1 + 5r/100) = (132/115) × P(1 + 2r/100)
1 + 5r/100 = (132/115)(1 + 2r/100)
115 + 5.75r = 132 + 2.64r
5.75r − 2.64r = 132 − 115
3.11r = 17
r = 17 / 3.11
r = 5.47%