Question

A sum amounts to Rs. 7,562 in 4 years and to Rs. 8,469.44 in 5 years at a certain rate per cent per annum, when the interest is compounded yearly. The rate of interest is:
1. 12%
2. 20%
3. 8%
4. 15%

Answer 1

Correct Answer - Option 1 : 12%

Given:

A sum amounts to Rs. 7,562 in 4 years and to Rs. 8,469.44 in 5 years at a certain rate percent per annum.

Concept Used:

If P be the principal, r be the rate of compound interest and t be time then amount after t year p(1 + r/100)^t

Calculation:

Let, P be the principal

P(1 + r/100)⁴ = 7562      ----(1)

P(1 + r/100)⁵ = 8469.44      ----(2)

Divided (2) by (1) get,

(1 + r/100) = 846944/756200

⇒ r/100 = 1.12 - 1

⇒ r = 12

∴ The rate of interest is 12%