At what rate of compound interest per annum will a sum of ₹1200 become ₹1348.32 in 2 years?
Answer & explanation
Correct answer: option 1
$Amount = Principal [1 + (rate per annum/100)]^2$
$1348.32 = 1200 [1 + (r/100)]^2$
$1348.32/1200 = [1 + (r/100)]^2$
$1.1236 = [1 + (r/100)]^2$
(r/100) = sqrt(1.1236) - 1 = 1.06-1
$r/100 = 0.06$
r = 6
The correct answer is Option (1) → 6%