A sum of money becomes three times itself in 3 years at compound interest. What is the rate of interest?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 44.2%.
Let Principal = P and Amount after 3 years = 3P
Time (n) = 3 years
Amount = P(1 + r/100)n
⇒ 3P = P(1 + r/100)3
⇒ (1 + r/100)3 = 3
⇒ 1 + r/100 = ∛3 ≈ 1.442
⇒ r/100 = 1.442 – 1 = 0.442
⇒ r = 44.2% per annum