A certain amount invested at a certain rate, compounded annually, grows to an amount in five years, which is a factor of 1.1881 more than to what it would have grown in three years. What is the rate percentage?
Show answer & explanation
Correct answer: B
Explanation
Correct Answer is option 2 i.e.9
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Concept |
Understanding |
Application |
Fair calculation |
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For CI: A = P[1 + r/100]t |
Suppose the principal after 3 years = Amount after 3 years = P Amount after 5 years = 1.1881P |
After 3 years: A = P[1 + r/100]t ⇒1.1881P = P[1 + r/100]2 ⇒ 1.1881 = [1 + r/100]2 ⇒ 1.09 = 1 + r/100 ⇒ r = 9% |
1.09 = 1 + r/100 ⇒1 + 9/100 = 1 + r/100 ⇒ r = 9 |