At what rate of interest ₹1,200 becomes ₹1,323 in 2 years where interest gets compounded annually:
Answer & explanation
Correct answer: option 3
Principal, P = 1200
After compounding annually @ r% p.a., Amount, A = 1323
T = 2 years
A = P(1 +r/100)^T
1323 = 1200 (1+ r/100)^2
1323/1200 = (1+ r/100)^2
1 + r/100 = 1.05
r = 5%
The correct answer is Option (3) → 5%