At a certain rate of interest compounded annually, a sum amounts to ₹10,890 in 2 years and to ₹11,979 in 3 years. The sum is:
Answer & explanation
Correct answer: option 1
Difference in amount after 2 and 3 years = 11979 - 10890 = 1089
Rate of Interest = \(\frac{1089}{10890}\) × 100% = 10%
Now, To find out initial sum ,
Formula used in case of compound interest,
Amount = P$(1 \;+\; \frac{R}{100})^t$
10890 = P [ 1 + \(\frac{10}{100}\) ]²
10890 = P [ \(\frac{11}{10}\) ]²
P = 10890 × \(\frac{10}{11}\) × \(\frac{10}{11}\)
= 9000
So, Initial sum is Rs. 9000