Question

What sum is to be invested for 2 years at 14% interest rate compounded annually to grow to Rs. 5458.32 ?
1. 4120
2. 3300
3. 4200
4. 4400

Answer 1

Correct Answer - Option 3 : 4200

Given:

Time period = 2 years

Rate of interest = 14%

Amount = Rs. 5458.32

Formula used:

\({\rm{A\;}} = {\rm{\;P}}{\left[ {1 + \frac{{\rm{R}}}{{100}}} \right]^{\rm{T}}}\)

Where,

A = Amount

P = Principal

R = Rate of interest

T = Time period

Calculations:

Let the principal be P

⇒ 5458.32 = P × [1 + (14/100)]²

⇒ 5458.32 = P × (114/100)²

⇒ 5458.32 = P × (57/50)²

⇒ 5458.32 = P × (3249/2500)

⇒ P = 5458.32 × (2500/3249)

⇒ P = Rs. 4200

∴ The invested sum is Rs. 4200