Question

If ₹500 amounts to ₹583.20 in two years compounded annually, find the rate of interest per annum.

• A. 10%
• B. 9%
• C. 8%
• D. 7%

Answer 1

The correct option is C

8%

Principal(P) = ₹500,
Amount(A) = ₹583.20,
Time(n) = 2 years.
Let the rate be $R\%$ per annum.

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

$500(1+\frac{R}{100}{)}^2=583.20$

$(1+\frac{R}{100}{)}^2=\frac{58320}{50000}=\frac{11664}{10000}$

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

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

$R=8$.

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