Question 129

At what percentage rate, compound interest compounded annually for a sum of ₹40,000, will amount to ₹44,100 in two years?

Solution

Let rate of interest = $$r\%$$ and principal sum = Rs. 40,000

Amount compounded annually after 2 years = $$P(1+\frac{r}{100})^2$$

=> $$40,000(1+\frac{r}{100})^2=44,100$$

=> $$(1+\frac{r}{100})^2=\frac{44100}{40000}$$

=> $$(1+\frac{r}{100}=\sqrt{1.1025}=1.05$$

=> $$\frac{r}{100}=1.05-1=0.05$$

=> $$r=5\%$$

=> Ans - (C)

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