Question

A sum of money amounts to Rs.4840 in 2 years and Rs.5324 in 3 years at compound interest compounded annually. What is the rate of interest per annum ?

• A. 8
• B. 10
• C. 12
• D. 15

Answer 1

The correct option is B 10

Let the principal be Rs.P and rate of interest p.a. = r% Then
$P{(1+\frac{r}{100})}^2=\mathrm{4840...........}\left(i\right)$ and $P{(1+\frac{r}{100})}^3=\mathrm{5324...........}\left(ii\right)$
$\Rightarrow \frac{5324}{4840}=\frac{(1+r/100{)}^3}{(1+r/100{)}^2}\Rightarrow 1+\frac{r}{100}=\frac{1331}{1210}$
$\Rightarrow \frac{r}{100}=\frac{1331}{1210}-1=\frac{121}{1210}=\frac{1}{10}\Rightarrow r=\frac{1}{10}\times 100=10\%p.a.$