Charles deposited $12,000 in the bank. He withdrew $5000 from
his account after one year. If...
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Accounting
Charles deposited $12,000 in the bank. He withdrew $5000 fromhis account after one year. If he receives a total amount of $9340after 3 years, find the rate of simple interest.
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Years
Principal
Interest @10%
Interest @8%
Interest @9%
1
12000
1,200
960
1080
2
7000
700
560
630
3
7000
700
560
630
Total
interest amount
2,600
2,080
2,340
The
principal value which charles will receive at the end of 3rd year
will be $7,000, since
he
withdraw $5,000 at end of year 1
It means
that charles will receive a total of $2,340($9,340-$7,000) as
interest.
As we
can see from the above table that by trial and error method the
simple interest rate is 9%
Note:We
can also perfrom interpolation and find out the Interest rate.
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