The compound interest on a sum for 4th year is Rs. 6000 and compound interest for 5th year is Rs. 6750(interest is compounded annually). What is the rate of interest?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. 12.5%.
| Understanding/Application |
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4th year compound interest = Rs. 6000 5th year compound interest = Rs. 6750 C.I. is interest calculated on the initial principal, which also have all of the accumulated interest from previous years. |
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Difference between 5th year and 4th year C.I. = 6750 - 6000 = 750 Rate of interest = (750 × 100/6000) = 12.5% |