Question

If the amount becomes 216/125 of itself in 3 years when compounded annually. Then find the rate of interest.
1. 10%
2. 30%
3. 25%
4. 20%

Answer 1

Correct Answer - Option 4 : 20%

Given-   

Amount becomes 216/125 of itself in 3 years

Concept Used-

Amount = P(1 + r/100)^T       [where P = Principal, R = Rate, T = Time]

Calculation-  

Let Principal be x

According to Question-

x(1 + r/100)³ = x(216/125) 

⇒ (1 + r/100)³ = (6/5)³

⇒ (100 + r)/100 = 6/5

⇒ 500 + 5r = 600

⇒ r = 20

∴ The rate of interest is 20%