Question 59

A sum of money lent out at a certain rate of compound interest compounded annaually amount to Rs.1260 in 2 years and to Rs 1606 in 3 years.find the rate of interest

Solution

According to question,

$$P\left(1+\frac{r}{100}\right)^2=1260\ \ and\ \ P\left(1+\frac{r}{100}\right)^3=1606.$$

So, $$\frac{P\left(1+\frac{r}{100}\right)^3}{P\left(1+\frac{r}{100}\right)^2}=\frac{1606}{1260}=1.2746.$$

or,$$\left(1+\frac{r}{100}\right)=1.2746.$$

or,$$r=27.46.$$

A is correct choice.

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