A sum of ₹16,875, when invested at r% interest per year compounded annually, amounts to ₹19,683 after 2 years. What is the value of r?
Answer & explanation
Correct answer: option 1
The Formula that we used here is -
Amount = P$(1 \;+\; \frac{R}{100})^t$
19683 = 16875 [ 1 + \(\frac{r}{100}\) ]²
\(\frac{19683}{16875}\) = [ 1 + \(\frac{r}{100}\) ]²
1.1664 = [ 1 + \(\frac{r}{100}\) ]²
( 1.08)² = [ 1 + \(\frac{r}{100}\) ]²
1 + \(\frac{r}{100}\) = 1.08
\(\frac{r}{100}\) = 0.08
r = 8%
So, Rate is 8%