If Rs. 500 amounts to Rs. 583.20 in two years compounded annually, find the rate of interest per annum.

Question

If Rs. 500 amounts to Rs. 583.20 in two years compounded annually, find the rate of interest per annum.

A. 7%p.a

B. 8%p.a

C. 9%p.a

D. 10%p.a

Correct Answer :

B. 8%p.a

          Principal = Rs. 500; Amount = Rs. 583.20; Time = 2 years.
           Let the rate be R% per annum..
'
           Then,      [ 500 (1+(R/100)²] = 583.20 or [ 1+ (R/100)]^{2 =}5832/5000 = 11664/10000

[ 1+ (R/100)]²= (108/100)² or 1 + (R/100) = 108/100 or R = 8

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If Rs. 500 amounts to Rs. 583.20 in two years compounded annually, find the rate of interest per annum.

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