Question

At what percent per annum will Rs. 3000 amounts to Rs. 3993 in 3 years if the interest is compounded annually
1. 12%
2. 5%
3. 10%
4. 20%

Answer 1

Correct Answer - Option 3 : 10%

Given:

Principal = Rs. 3000

Amount = Rs. 3993

Time = 3 years

Formula used:

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

Compound Interest = P((1 + R/100)^t – 1)

Calculation:

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

⇒ 3993 = 3000(1 + R/100)³

⇒ (1 + R/100)³ = 3993/3000

⇒ (1 + R/100)³ = 1331/1000

⇒ (1 + R/100) = 11/10

⇒ R/100 = 1/10

⇒ R = 10%

∴ The annual rate of interest is 10%.