Question

At what rate percent compound interest does a sum of money become 1.44 times of itself in 2 years?

• A. 40%
• B. 30%
• C. 20%
• D. 10%

Answer 1

The correct option is C 20%

Let us assume the principal to be ₹ y.
Then, the amount will be ₹ 1.44y.
And, n = 2 years
We know that,

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

$1.44y=y(1+\frac{r}{100}{)}^n$

$1+r/100=1.2$
$r/100=1.2-1=0.2$
$r/100=2/10$
$r=20$
Therefore, the rate of compound interest is 20%.