A sum invested at compound interest amounts to Rs 7,800 in 3 years and Rs 11,232 in 5 years. What is the rate per cent?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 20%.
The sum amounts to Rs. 7800 in 3 years and Rs. 11232 in 5 years.
At compound interest, the final amount = Principal(1 + Rate/100)Time
Rs. 7800 becomes Rs. 11232 at compound interest in two years.
Let the rate of interest be R.
11232 = 7800(1 + R/100)2
[(100 + R)/100]2 = 11232/7800
[(100 + R)/100]2 = 144/100
[(100 + R)/100]2 = (12/10)2
[(100 + R)/100] = (12/10)
100 + R = 1200/10 = 120
R = 120 - 100 = 20%