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A sum of money invested at compound interest amounts in 2 years to Rs. 2,000 and in 3 years to Rs. 2,320. The interest rate per annum is:
- A6%
- B5%
- C10%
- D16%
Answer not set
Discussion 1
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CCommunity
We know the formula for compound interest -
$(\Rightarrow {\rm{\;CI}} = \left[ {{\rm{P}}\left\{ {{{\left( {1{\rm{\;}} + {\rm{\;}}\frac{{\rm{r}}}{{100}}} \right)}^t} - 1} \right\}} \right])$
Where,
CI = Compound interest
P = Principal
R = Rate of interest
T = Time period
Let the principal be P
P(1 + r/100)2 = 2000
P(1 + r/100)3 = 2320
Dividing both the equations
(1 + r/100) = 2320/2000
r = ((2320/2000) – 1) × 100
r = 16%
$(\Rightarrow {\rm{\;CI}} = \left[ {{\rm{P}}\left\{ {{{\left( {1{\rm{\;}} + {\rm{\;}}\frac{{\rm{r}}}{{100}}} \right)}^t} - 1} \right\}} \right])$
Where,
CI = Compound interest
P = Principal
R = Rate of interest
T = Time period
Let the principal be P
P(1 + r/100)2 = 2000
P(1 + r/100)3 = 2320
Dividing both the equations
(1 + r/100) = 2320/2000
r = ((2320/2000) – 1) × 100
r = 16%