Question

A sum of money becomes $\frac{125}{64}$ times of itself in 3 years. Find the rate of compound interest.

• A. 10%
• B. 15%
• C. 25%
• D. None of these

Answer 1

The correct option is C

25%

$A=P(\frac{1+R}{100}{)}^n$

$\Rightarrow$ $\frac{125}{64}P=P(1+\frac{R}{100}{)}^3$

$\Rightarrow$ $\frac{125}{64}=(1+\frac{R}{100}{)}^3$

$\Rightarrow$ $(\frac{5}{4}{)}^3=(1+\frac{R}{100}{)}^3$

$\Rightarrow$ $1+\frac{R}{100}=\frac{5}{4}$

$\Rightarrow$ $\frac{R}{100}=\frac{1}{4}$

$\Rightarrow$ R = $25\%$