| Author: Raghuram 15 Sep 2012 Member Level: Silver Points : 10 (Rs 7) Voting Score: 2 |
It becomes very complex and lengthy to solve this directly. So you may do this by interpolation.
The method is explained below:
Just assume two different values for 'r'. Remember if the assumed values are nearer, then the answer will be more nearer to exact answer. Otherwise you may get some approximate value, which will not be nearer to the answer.
For example, here I am assuming 0.15 and 0.2 as values for 'r'. When 'r' is 0.2, the total value of the right hand side is 86045 (approx.). That means the balance is 94500 – 86045 = 8455.
When 'r' is 0.15, then the value of the right hand side is 96483 (approx.). So now the balance is 94500 – 96483 = – 1983.
Now if you observe, for 0.05 decrease in value of r, the balance is decreased by 10438 {8455 – (–1983)}. To get the value of 'r', the balance should be zero i.e. the balance should be reduced by 8455.
To understand this more clearly:
Let us take a variable 'x' as the fall in the value.
For 0.05 fall in value – the balance is reduced by 10438.
For 'x' fall in value – the balance is reduced by 8455.
In simple terms,
0.05 - 10438
x - 8455
So by proportion, the value of x = 0.05*8455/10438 = 0.0405(approx.)
So, if the fall in value is 0.0405, then we will get the value of 'r'. Hence the approximate value of 'r' will be 0.2 – 0.0405 = 0.1595 i.e. 15.95 % approximately.
This method will be easier if you assume the two values, such that one gives positive and the other one gives negative value.
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| Author: [Anonymous] 15 Sep 2012 Member Level: Gold Points : 1 Voting Score: 0 |
Thanks a lot . This is really the real education site. The answer to my question which I have not got anywhere I got on the ISC. Thanks a lot Raghuram.
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