Question

If Rs. 500 amounts to 583.20 in two years compounded annually, the rate of interest per annum is?

• A. $6\%$
• B. $7\%$
• C. $9\%$
• D. $8\%$

Answer 1

The correct option is D $8\%$

Here Principal (P) = Rs. 500
Time (t) = 2 years
Amount (A) = Rs. 583.20; Rate (r) = ?
Using the relation
$A=P{(1+\frac{r}{100})}^t$
or $583.20=500{(1+\frac{r}{100})}^2$
or ${(1+\frac{r}{100})}^2=\frac{583.20}{500}=1.1664$
$\therefore 1+\frac{r}{100}=\sqrt{1.1664}=1.08\therefore r=0.08\times 100=8\%$