Question

If ₹ 1000 amounts to ₹ 1166.4 in two years compounded annually, then the rate of interest per annum is 12%.

• A. True
• B. False

Answer 1

The correct option is B

False

Principal(P) = ₹ 1000, Amount(A) = ₹ 1166.4, Time(n) = 2 years.
Let the rate be $R\%$ per annum.

Using the formula $P(1+\frac{R}{100}{)}^n=A$ , we get,

$1000(1+\frac{R}{100}{)}^2=1166.4$

$(1+\frac{R}{100}{)}^2=\frac{1166.4}{1000}=\frac{11664}{10000}$

$\therefore$ $(1+\frac{R}{100}{)}^2=(\frac{108}{100}{)}^2$

$1+\frac{R}{100}=\frac{108}{100}$

$R=8$

So, rate of interest = 8% p.a.

Hence the given statement is false.