Sanjay invested an amount of Rs 16,000 for two years on compound interest and received an amount of RS 17,640 on maturity. What is the rate of interest per annum?
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Rate of interest per annum is 5%
Compound interest is calculated by the formula -
A= P(1+r/100)^n
A = amount after interest
P = principal.or initial amount
R = rate of interest
N = time period
Given values in question are -
A = Rs. 17640
P = Rs. 16000
N = 2 years.
Putting value in formula -
17640/16000 = (1+r/100)²
(21/20)² = (1+r/100)²
(21/20)-1 = r/100
1/20 = r/100
R = 5%
Therefore, rate of interest per annum is 5%.
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