₹ 2000 amounts to ₹ 2226.05 in 2 years on compound interest. What is the rate of interest per annum?
Answer & explanation
Correct answer: option 3
We have,
Rs 226.05 is the interest
Principal = Rs 2000
Time = 2 years
Rate = r%.
So we know that,
Interest = P{(1+r/100)n−1}
226.05 = 2000{(1+r/100)2−1}
So, r = 5.5%.