Question

In how many years shall Rs. 8000 invested at 20% rate of interest compounded annually gives Rs. 3520 as compound interest?

1. 2
2. 3
3. 4
4. 5

Answer 1

Correct Answer - Option 1 : 2

Given:

P = Rs. 8000

R = 20%

C.I = 3520

Formula used:

A = P × [1+ (R/100)]^N

Where, P = Principal amount, R = Rate of interest,

N = Number of years and C.I = Compound interest, A = Amount

Calculation:

Amount = 8000 + 3520

⇒ Amount = 11520

⇒ 11520 = 8000 × (1 + (20/100))^N

⇒ 11520/8000 = 1.2^N

⇒ 1.44 = 1.2^N

⇒ N = 2

∴ The number of years is 2 years.