Question

A sum of 8000 Rs. will amount to 8820 Rs. in 2 years if the interest is calculated every year. The rate of compound interest is :
A. 3%
B. 5%
C. 6%
D. 7%

Answer 1

Principal = Rs. 8000,  

Amount = Rs. 8820  

Let Rate % = R  

Time = 2 years  

By using formula,

=> 8820=8000(1+R/100)^2

=> 8820/8000=(1+R/100^)2

=> 441/400=(1+R/100)2

Taking square root of both sides,

=> 21/20=(1+R/100)

=> R = 5 %

Answer 2

Option B is correct.........