Question 85

If Rs 2500 becomes to Rs 2970.25 in 2 years at compound interest compounded annually, then what is the yearly rate of interest (in %)?

Solution

Let rate of interest = $$r\%$$

Sum of Rs. 2500 amounts to Rs. 2970.25

Time period (t) = 2 years

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

=> $$2500(1+\frac{r}{100})^2=2970.25$$

=> $$(1+\frac{r}{100})^2=\frac{2970.25}{2500}=1.1881$$

=> $$1+\frac{r}{100}=\sqrt{1.1881}=1.09$$

=> $$\frac{r}{100}=1.09-1=0.09$$

=> $$r=0.09\times100=9\%$$

=> Ans - (B)

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