Question

Under a new scheme, a bank offers an interest of 20% per annum compounded annually. Suraj deposits Rs. 10,000 under this scheme and at the end, he receives Rs. 12000. What was the tenure of the scheme that Suraj had chosen?

1. 1 year
2. 2 years
3. 3 years 
4. 4 years
5. None of these

Answer 1

Correct Answer - Option 1 : 1 year

Given :

Principal amount = 10,000

Rate = 20%

Amount received = Rs. 12000

Formula :

Amount = P(1 + r/100)^t

Calculations :

Let the tenure be  t years

⇒12000 = 10000(1 + 20/100)^t

⇒ 12000 = 10000(1+ 1/5)^t

⇒ 6/5 = (6/5)^t

⇒ t= 1

∴ He invested his money for 1 year.