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Feri invests some money. The rate of interest fore the first year is 2.5%. At the end of the second year the overall percentage increase of Feri's investment is 6.6%. Find the rate of interest for the second year.

Given the answer Rate of increase (R) for the second year is = 4%

I am thinking

let x be invested amount

Money After 1st year = $2.5/$100*x+x

Money After 2nd year = R * Money After 1st year + Money After 1st year

Money After 2nd year = $6.6/$100 * x + x

Is the R supposed to be the percentage I multiply the money in the first year like I stated in the thought process

Bret Joseph
  • 103

1 Answers1

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If you have an increase of $R\%$ you multiply the amount of money you have by $(1+\frac R{100})$. The first year increase is $2.5\%$ so we have multiplied by $1.025$. After two years we have multiplied by $1.066$. If the increase in the second year is $R\%$ then $1.066=1.025(1+\frac R{100})$. That gives you a linear equation for $R$.

Ross Millikan
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