A certain sum of money becoms times of itself in 3 years compound interest, compounded annually. What is the rate of interest?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e. 20 percent.
We know that,
A = P(1 + R/100)T
where, A = Amount, P = Principal, R = Rate, and T = Time
Let the principal be x
⇒ x(1 + R/100)3 = x(216/125)
⇒ (1 + R/100)3 = (216/125)
⇒ (1 + R/100) = 6/5
⇒ R/100 = 6/5 - 1 = 1/5
⇒ R/100 = 1/5
⇒ R = 20%