Question

A sum of Rs. $1,200$ becomes Rs. $1,323$ in $2$ years at compound interest compounded annually. Find the rate per cent.

• A. $8\%$
• B. $7\%$
• C. $6\%$
• D. $5\%$

Answer 1

Answer: (D)

$5\%$

Let r% be rate per annum, then,

$1323=1200(1+\frac{r}{100}{)}^2$

$⟹\frac{1323}{1200}=(1+\frac{r}{100}{)}^2$

$⟹\sqrt{\frac{1323}{1200}}=(1+\frac{r}{100})$

$⟹1.05=(1+\frac{r}{100})$

$⟹\frac{r}{100}=1.05-1=0.05$

$⟹r=100\times 0.05=5$%