Question

If in two years time a principal of $Rs.100$ amounts to $Rs.121$, when the interest at the rate of $r\%$ is compounded annually, then the value of $r$ will be

• A. 10.5
• B. 10
• C. 15
• D. 14

Answer 1

The correct option is B 10

We know the formula for amount $A$ when prinicipal $P$ is compounded annually for $n$ years, at the rate of $R\%$ per annum is :

$A=P(1+\frac{R}{100}{)}^n$

$121=100(1+\frac{R}{100}{)}^2$
$\frac{121}{100}=(1+\frac{R}{100}{)}^2$

${\left(\frac{11}{10}\right)}^2=(1+\frac{R}{100}{)}^2$

$1+\frac{R}{100}=\frac{11}{10}$

$\frac{R}{100}=\frac{1}{10}=0.1$

$R=10$%