Question

a sum of Rs 200 lent out at compound interest compounded annually amounts to Rs 220.50 in two years what is the rate of interest

Answer 1

A= Rs 220.50.

P = ₨ 200.

n= 2 years

R= ?

A = P (1+R/100)²    [formula for compound interest to find amount]

⇒220.50 = 200×(1+R/100)^2

⇒220.50/200 = (1+R/100)^2

⇒1+R/100 = √1.1025 = 1.05

⇒R/100 = 1.05 -1 =0.05

⇒R = 0.05*100

R = 5% ANS

Answer 2

P = ₨200. A= Rs 220.50. n= 2 years

r= ??

A = p (1+r/100)²

220.50 = 200×(1+r/100)²

1+r/100 = √1.1025 = 1.05125 approx

r = 5.125% approx.  ans