A compound interest of Rs. 21,515 is received on a sum of Rs. 65,000 in a period of three years. What was the rate of interest on which the sum was being compounded annually?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is Option 4 i.e. 10%.
We have given, in the question,
P = Rs 65000
n = 3 years
CI = 21515
r = ?
Compound interest (CI) = P{(1 + r/100)n - 1}
21515 = 65000{(1 + r/100)3 - 1}
21515 = 65000(1 + r/100)3 - 65000
21515 + 65000 = 65000(1 + r/100)3
86515 = 65000(1 + r/100)3
6655/5000 = (1 + r/100)3
1331/1000 = (1 + r/100)3
(11/10)3 = (1 + r/100)3
11/10 = 1 + r/100
11/10 - 1 = r/100
1/10 = r/100
r = 10%