Two banks pay interest at rates that differ by 1 Money inves

Two banks pay interest at rates that differ by 1%. Money invested for one year in the first account earns $105 interest. The same amount invested in the other account earns $125. find the two rates of interest.

Solution

Let the interest rate be r .Let amount invested be x

1st bank : Interest = x*r*1/100 = 0.01r*x = 105 ---(1)

2nd bank : interest = x*(r+1)/100 = 0.01x(r+1) = 125 --(2)

Divide equation 2 by equation 1:

(r+1)/r = 125/105

105r +105 = 125r

20r = 105 ; r = 5.25 %

rate of interest = 5.25% and 6.25%