Question

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

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

Answer 1

The correct option is D $5$%

Let $r$% be the rate per annum.
$1,323=1,200{(1+\frac{r}{100})}^2$
$\frac{1,323}{1,200}={(1+\frac{r}{100})}^2$
$\frac{\sqrt{1,323}}{1,200}=(1+\frac{r}{100})$
$\frac{r}{100}=1.05-1$
$r=5$%.