A sum amounts to ₹7,562 in 4 years and to ₹8,469.44 in 5 years at a certain rate per cent per annum, when the interest is compounded yearly. The rate of interest is:
Answer & explanation
Correct answer: option 1
Amount = Principal × ( 1 + \(\frac{rate }{100}\) )t
8469.44 = 7562 × ( 1 + \(\frac{rate }{100}\) )¹
\(\frac{8469.44 }{7562}\) = ( 1 + \(\frac{rate }{100}\) )
1.12 = ( 1 + \(\frac{rate }{100}\) )
\(\frac{rate }{100}\) = 1.12 - 1 = 0.12
Rate = 12%