A certain sum of money become 2.56 times of itself in 2 years at compound interest. Find the rate of interest if compounded annually.
Answer & explanation
Correct answer: option 2
A = P( 1 + \(\frac{R}{100}\))t
2.56 P = P ( 1 + \(\frac{R}{100}\))2
(1.6)2 = ( 1 + \(\frac{R}{100}\))2
1.6 - 1 = \(\frac{R}{100}\) ⇒ 0.6 = \(\frac{R}{100}\)
R = 60%