In how many years will Rs. 100000 become Rs. 1,33,100 at a compound interest rate of 10% per annum?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 3 years
At compound interest the amount is multiplied by the same factor every year: \(A=P\left(1+\frac{r}{100}\right)^{n}\). At 10% a year this factor is 1.1.
The amount is 1.331 times the sum invested: \(\displaystyle \frac{A}{P}=\frac{133100}{100000}=1.331\)
Each year multiplies the amount by 1.1: two years give \(1.1^{2}=1.21\) and three years give \(1.1^{3}=1.331\), so \(n=\) 3 years