Question

At what rate percentage compound interest will Rs. 80,000 amount to Rs. 88,200 in 2 years?

• A. $6$%
• B. $4$%
• C. $5$%
• D. $10$%

Answer 1

The correct option is C $5$%

We know that,

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

Let the rate of interest be $r$

Given that, $P=Rs.80,000,A=Rs.88,200$ and $n=2$

$\therefore 88200=80000{[1+\left(\frac{r}{100}\right)]}^2$

$\Rightarrow 1+\left(\frac{r}{100}\right)=\frac{21}{20}$

$\Rightarrow \left(\frac{r}{100}\right)=\frac{21}{20}-1=\frac{1}{20}$

$\Rightarrow r=\frac{100}{20}=5$

$\therefore r=5$

Hence, the rate of interest is $5\%$