Question

A sum becomes 125 times itself in three years, when the rate is calculated at compound interest yearly. Find the rate of interest.
1. 200%
2. 300%
3. 400%
4. 500%

Answer 1

Correct Answer - Option 3 : 400%

Given:

Time = 3 years

Amount = 125 × Principal

Formula used:

A = P(1 + R/100)^T

Where,

A = Amount 

P = Principal

R = Rate of interest

T = Time

Calculation:

According to the question, we have

⇒ 125P = P(1 + R/100)³

⇒ (5)³ = (1 + R/100)³

⇒ 5 = (1 + R/100)

⇒ R = 400%

∴ The rate of interest is 400%.