Question

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

• A. (10\%\)
• B.
• C.
• D.

Answer 1

The correct option is C

Principal = Rs.500; Amount = Rs. 583.20; Time = 2 years.
Let the rate be R$\%$ per annum. Then,
$\left[500\right(1+\frac{R}{100}{)}^2]=583.20$ or $(1+\frac{R}{100}{)}^2=\frac{58320}{50000}=\frac{11664}{10000}$
$\therefore$ $(1+\frac{R}{100}{)}^2=(\frac{108}{100}{)}^2$ or $1+\frac{R}{100}=\frac{108}{100}$ or $R=8$.
So, rate = $8\%$ p.a.