The compound interest on a principal in 3 years is 33.1% of the principal if the interest is compounded annually. Find the rate of interest per annum :
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. 10%
Given that
C.I. = 33.1 % of Principal = 0.331 P
Time = 3 years
Formula used
C.I. = P(1 + rate/100)time - P
Calculation
⇒ 0.331 P = P(1 + rate/100)time - P
⇒ 0.331P + P = P (1 + rate/100)3
⇒ 1.331P = P (1 + rate/100)3
⇒ 1331/1000 = (1 + rate/100)3
⇒ 11/10 = 1 + rate/100
⇒ rate = 10% p.a.