On a certain sum, the interest is compounded annually. If the compound interest for the second year is ₹400 and the compound interest for the fourth year is 576, then what is the rate of interest per annum?
Answer & explanation
Correct answer: option 1
A particular sum of money with a particular rate of interest in 2 years = Rs.400
A particular sum of money with a particular rate of interest in 4 years = Rs.576
Ratio of Amount after 2 years and 4 years ,
400 : 576
{ as there is gap of 2 years in both the amount , so on square root both side }
\(\sqrt {400 }\) : \(\sqrt { 576}\)
20 : 24
Rate of Interest = \(\frac{24 - 20 }{20}\) × 100%
= \(\frac{1 }{5}\) × 100%
= 20%