Ac sum amounts to Rs. 6580 in 2 years and amounts to Rs. 7896 in 3 years on compound interest (compounded annually) at the same rate of interest. What is the annual rate of interest ?
Answer & explanation
Correct answer: option 4
Compound interest = Principal × ( 1 + \(\frac{rate }{100}\) )t - Principal
ATQ,
CI = 7896 - 6580 = 1316
1316 = 6580 × ( 1 + \(\frac{rate }{100}\) )1 - 6580
7896 = 6580 × ( 1 + \(\frac{rate }{100}\) )
1 + \(\frac{rate }{100}\) = \(\frac{7896 }{6580}\)
\(\frac{rate }{100}\) = \(\frac{1316 }{6580}\)
rate = 20%