Question

A man borrowed a sum of Rs. 50,000 at 8% per annum compounded annually and he returned Rs. 58,320 to the bank. Find the time period for which he borrowed the sum.
1. 6 years
2. 2 years
3. 4 years
4. 3 years

Answer 1

Correct Answer - Option 2 : 2 years

Given:

Principal (P) = Rs. 50,000

Amount (A) = Rs. 58,320

Rate (R) = 8%

Formula used:

A = P(1 + R/100)n

Where,

A → Amount

P → Principal

R → Rate 

n → Time

Calculations:

Let the time period be n years.

A = P(1 + R/100)n

⇒ 58320 = 50000(1 + 8/100)n

⇒ (108/100)n = 58320/50000

⇒ (27/25)n = 729/625

⇒ (27/25)n = (27/25)2

⇒ n = 2

∴ The time period is 2 years.