Question

By using the formula, find the amount and compound interest on:

At what rate per cent per annum will Rs 4000 amount to Rs 4410 in 2 years when compounded annually ?

Answer 1

$\text{Principal (P) = 4000}\text{Amount (A) = Rs. 4410}\text{Period (n) = 2 years}\text{Let r be the rate per cent per annum we know that,}A=P{(1+\frac{r}{100})}^n\Rightarrow \frac{A}{P}={(1+\frac{r}{100})}^n\Rightarrow \frac{4410}{4000}={(1+\frac{r}{100})}^2\Rightarrow {\left(\frac{21}{20}\right)}^2={(1+\frac{r}{100})}^2\Rightarrow 1+\frac{r}{100}=\frac{21}{20}\Rightarrow \frac{r}{100}=\frac{21}{20}-1=\frac{1}{20}\Rightarrow r=\frac{1}{20}\times 100=5\therefore Rate=5\%p.a.Ans.$