A sum of ₹14,375, when invested at r% interest per year compounded annually, amounts to ₹16,767 after two years. What is the value of r?
Answer & explanation
Correct answer: option 4
The Formula that we used here is -
Amount = P$(1 \;+\; \frac{R}{100})^t$
Compound Interest = Amount - Principal
16767 = 14375 [ 1 + \(\frac{r}{100}\)]²
\(\frac{16767}{14375}\) = [ 1 + \(\frac{r}{100}\)]²
1.1664 = [ 1 + \(\frac{r}{100}\)]²
( 1.08 )² = [ 1 + \(\frac{r}{100}\)]²
\(\frac{r}{100}\) = 1.08 - 1
r = 8%