Question

At what rate of compound interest per annum will a sum of Rs. 7500 become Rs. 8748 in 2 years?

1. 10%
2. 8%
3. 5%
4. 4%
5. None of these 

Answer 1

Correct Answer - Option 2 : 8%

Given:

Amount = Rs 8748

Principal = Rs 7500

Time  = 2 years

Formula:

A = P(1 + R/100)ⁿ

Calculation:

A = P(1 + R/100)ⁿ

⇒ 8748 = 7500(1 + R/100)²

⇒ (1 + R/100)² = 8748/7500

⇒ (1 + R/100)² = 729/625

⇒ 1+ R/100 = 27/25

⇒ R/100 = 27/25 – 1

⇒ R/100 = 2/25

⇒ R = (2/25) × 100

⇒ R = 8%

∴ Rate of compound interest per annum is 8%