In how many years will Rs.12,500 become Rs.21,600 at the rate of 20% per annum on compound interest when interest is compounding annually?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is Option 4 i.e. 3.
A = P(1 + R/100)T
where, A = amount, P = principal, R = rate and, T = time
⇒ 21600 = 12500(1 + 20/100)T
⇒ 21600/12500 = (1 + 20/100)T
⇒ 216/125 = (1 + 20/100)T
⇒ (6/5)3 = (1 + 20/100)T
⇒ (6/5)3 = (6/5)T
⇒ T = 3 years