Question 62

At what rate of compound interest per annum will a sum of Rs 50000 become Rs 73205 in 2 years?

Solution

Let rate of interest = $$r$$%

Sum = Rs. 50,000

Amount after 2 years = Rs. 73,205

Amount under compound interest = $$P (1 + \frac{R}{100})^T$$

=> $$50000(1 + \frac{r}{100})^2 = 73205$$

=> $$(1 + \frac{r}{100})^2 = \frac{73205}{50000} = 1.4641$$

=> $$1 + \frac{r}{100} = \sqrt{1.4641} = 1.21$$

=> $$\frac{r}{100} = 1.21 - 1 = 0.21$$

=> $$r = 0.21 \times 100 = 21 \%$$

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