Question

At what rate of compound interest will $Rs.20,000$ become $Rs.24,000$ after 2 years?

Answer 1

We have,

$P=Rs.20,000$

$A=Rs.24,000$

$T=2years$

$R=?$

We know that

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

Therefore,

$24000=20000{(1+\frac{R}{100})}^2$

$24=20{(1+\frac{R}{100})}^2$

${(1+\frac{R}{100})}^2=\frac{6}{5}$

$(1+\frac{R}{100})=\sqrt{\frac{6}{5}}=1.0954$

$\frac{R}{100}=0.0954$

$R=9.54\%$

Hence, this is the answer.