Question

At what rate of interest will $Rs.20000$ become $Rs.24200$ after $2$ years when interest is compounded annually?

• A. $5\%$
• B. $6\%$
• C. $10\%$
• D. $15\%$

Answer 1

The correct option is C $10\%$

$P=Rs.20,000,A=Rs.24,200.n=2years.$

$A=P{[1+\frac{r}{100}]}^n$

$\Rightarrow 24,200=20,000(1+\frac{r}{100}{)}^2$

$\Rightarrow \sqrt{1.21}=1+\frac{r}{100}$

$\Rightarrow 1.1=1+\frac{r}{100}$

$\Rightarrow \frac{r}{100}=1.1-1=0.1\Rightarrow r=10$

The rate of interest is $10$ %