Question : At what rate of compound interest (compounding annually) per annum will a sum of Rs. 1,000 become Rs. 1,060.90 in 2 years?
Option 1: 2% per annum
Option 2: 4% per annum
Option 3: 3% per annum
Option 4: 5% per annum

Question

Question : At a certain sum of money with the interest rate of 6% per annum for 4 years, the simple interest is Rs. 4500. Find the compound interest (compounding annually) of 2 years at the same sum when the rate of interest is 4% per annum.

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Answer 1

Correct Answer: 3% per annum

Solution : Given: Total amount = Rs. 1,060.90, Principal = Rs. 1,000, Time = 2 years
Let the rate be $r$ .
We know, $Total Amount = Principal \times (1 + \frac{Rate}{100})^{Time}$
$\Rightarrow 1060.90 = 1000 {(1 + \frac{r}{100})}^{2}$
$\Rightarrow (\frac{100 + r}{100})^{2} = \frac{10609}{10000}$
$\Rightarrow (\frac{100 + r}{100})^{2} = (\frac{103}{100})^{2}$
$\Rightarrow \frac{100 + r}{100} = \frac{103}{100}$
$\Rightarrow 100 + r = 103$
$\Rightarrow r = 3 %$
Hence, the correct answer is 3% per annum.

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Question : At what rate of compound interest (compounding annually) per annum will a sum of Rs. 1,000 become Rs. 1,060.90 in 2 years?Option 1: 2% per annumOption 2: 4% per annumOption 3: 3% per annumOption 4: 5% per annum

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Question : At what rate of compound interest (compounding annually) per annum will a sum of Rs. 1,000 become Rs. 1,060.90 in 2 years?
Option 1: 2% per annum
Option 2: 4% per annum
Option 3: 3% per annum
Option 4: 5% per annum