Question

The compound interest on certain sum of money becomes 7 times the sum invested in 3 years. If interest in compounded annually. What is the rate of interest?
1. 200%
2. 100%
3. 75%
4. 50%

Answer 1

Correct Answer - Option 2 : 100%

Given:

The compound interest on certain sum of money becomes 7 times the sum invested in 3 years. 

Formula Used:

C.I = P[(1 + r/100)ⁿ - 1]

C.I = compound interest

P = Principal

r = rate p.a.

n = time period

Calculation:

Let the rate of interest be 'r' p.a.

C.I/P = 7

⇒ 7 = [(1 + r/100)3 - 1]

⇒ (1 + r/100)3 = 8

⇒ (1 + r/100) = 2

⇒ r = 100% 

∴ Required rate of interest is 100%