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Question 43

A sum of money compounded annually becomes Rs.625 in two years and Rs.675 in three years. The rate of interest per annum is

Solution

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As we know, formulae of compound interest for 2 years  will be:
$$P(1+\frac{r}{100})^{2}$$ = 625  (Where r is rate, P is principal amount)
For 3 years:
$$P(1+\frac{r}{100})^{3}$$ = 675
Dividing above two equations we will get r=8%

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