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If the principal amount of 10,000 accounts to 14,400 with 20% rate of interest compounded annually. Calculate the time for which it was invested.
1. 10 years
2. 5 years
3. 2 years
4. 4 years
5. 3 years

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Correct Answer - Option 3 : 2 years

Calculation:

Principal = ₹ 10,000

Interest = 20% p.a. compounded annually

Amount after interest = ₹ 14,400

As the rate is 20% p.a., so 1 - year interest would be 20%.

Amount = 10,000 × (1 + 20/100)t = 10,000 × 1.2t 

14,400 = 10,000 × 1.2t

1.44 = 1.2t

t = 2 years

Time for which money was invested = 2 years

Amount = Principal × (1 + r/100)t
Compound interest in t years = Principal × (1 + r/100)t - Principal

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