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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 interestFor compound interest, we know that,A=P(1+R100)THere, 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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