A sum of money, when invested at the rate of 6.25% simple interest per annum, amounts to \(\frac{11 }{8 }\) times of itself in 'n' years. What is the value of 'n' ?
Answer & explanation
Correct answer: option 1
Let principal = P & Amount = \(\frac{11 }{8 }\)P
Amount = Principal + Simple interest
\(\frac{11 }{8 }\)P = P + Simple interest
Simple Interest = \(\frac{11 }{8 }\)P - P = \(\frac{3 }{8 }\)P
We know ,
Simple Interest = \(\frac{Principal ×Rate × Time }{100}\)
Time = ' n ' years
\(\frac{3 }{8 }\)P = \(\frac{P × 6.25 × n }{100}\)
\(\frac{3 }{8 }\) = \(\frac{ 6.25 × n }{100}\)
n = 6 years