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Question

At what rate percent per annum will a sum of Rs. 2000 amount to Rs. 2205 in 2 years at compound interest?

A
3%
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B
2%
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C
5%
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D
4%
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Solution

The correct option is A 5%
Given that, a sum of Rs. 2000 amounts to Rs. 2205 in 2 years.
To find out: The rate of interest

For compound interest, we know that,
A=P(1+R100)T

Here, P=Rs. 2000, A=Rs. 2205 and T=2years.

2205=2000×(1+R100)2

441400=(1+R100)2

2120=(1+R100)

R=120×100=5%

Hence, the required rate of interest is 5%.

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