Question

A man borrowed $Rs.3125$ on compound interest which amounted to $Rs.4500$ in $2$ years. What was the rate of interest per annum?

• A.
• B.
• C.
• D.

Answer 1

The correct option is C

Principal $\left(P\right)=Rs3125$
Amount $\left(A\right)=Rs4500$
Time $\left(T\right)=2yrs$
As,
$A=P\times {(1+\left(\frac{R}{100}\right))}^T$, where R is the Rate of interest p.a.
So, that
$\frac{A}{P}={(1+\left(\frac{R}{100}\right))}^2\frac{4500}{3125}={(1+\left(\frac{R}{100}\right))}^{2}1.44={(1+\left(\frac{R}{100}\right))}^2(1.2{)}^2={(1+\left(\frac{R}{100}\right))}^{2}1.2=1+\frac{R}{100}0.2=\frac{R}{100}R=20\%$
Therefore, $R=20\%p.a$