A sum of ₹ 16,875, when invested at r% interest per year compounded annually, amounts to ₹ 19,683 after 2 years. What is the value of r?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 8
Given:
Principal (P) = 16875
Amount (A) = 19683
Time (T) = 2 years
Formula used:
A = P(1 + R/100)T ---- (1)
Where R = rate
Calculations:
Using equation (1), we get
⇒ 19683 = 16875(1 + R/100)2
⇒ 19683/16875 = (1 + R/100)2
⇒ 729/625 = (1 + R/100)2
⇒ 27/25 = (1 + R/100)
⇒ 27/25 - 1 = R/100
⇒ 2/25 = R/100
⇒ R = 8%