Question

The compounded interest on a certain sum for the 2nd year and 3rd year are 4600 and 5060 respectively. What is the rate of interest?
1. 15%
2. 10%
3. 12%
4. 8%

Answer 1

Correct Answer - Option 2 : 10%

Given:

Compond interest for 2 years 4600 and for 3 years 5060

Calculation:

Let the sum be P, and rate of interest R% per annum

⇒ Interest for 2nd year = P(1 + R/100)² - P(1+ R/100) = 4600

⇒ P × (R/100) × (1 + R/100) = 4600      ....(1)

⇒ Interest for the 3rd year = P(1 + R/100)³ - P(1 + R/100)² = 5060

⇒ P(R/100) × (1 + R/100)² = 5060      ....(1)

Dividing (2) by (1)

⇒ (1 + R/100) = 1.1, R = 10

∴ The required result will be 10%.

Alternate Method:

⇒ (5060 - 4600)/4600 × (100) = 10%.