Question

    At what annual compound interest rate will a principal

    amount of Rs. 16,000 grow to Rs. 25,000 in 2 years?
    A 15% Correct Answer Incorrect Answer
    B 20% Correct Answer Incorrect Answer
    C 30% Correct Answer Incorrect Answer
    D 25% Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    Let the rate of interest be R% per annum According to question, 25000 = 16000 × (1 + R/100)2 (1 + R/100)2 = 25/16 Taking positive square root both sides 1 + R/100 = 5/4 R/100 = 5/4 – 1 = 1/4 R = 25%

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