A sum of money, when invested at a certain rate of compound interest p

1.	A sum of money, when invested at a certain rate of compound interest per year, became 1.21 times the sum invested on maturity after two years. What was the rate of compound interest per annum?1. 11%2. 10.5%3. 10%4. 9.9%
Answer» Correct Answer - Option 3 : 10% Given: A sum of money, when invested at a certain rate of compound interest per year, became 1.21 times The sum invested on maturity after two years Formula used: Compound interest (A) = Principal amount × [1 + (rate of interest/100)]^t Calculation: Principal amount = p Amount = 1.21P Time = 2 year Rate of interest = r ⇒ 1.21P = P [1 + (r/100)]² ⇒ 1.21 = [1 + (r/100)]² ⇒ (1.1)² = [1 + (r/100)]² ⇒ 1.1 = (100 + r)/100 ⇒ 110 = 100 + r ⇒ r = 10% ∴The rate of compound interest per annum is 10%

A sum of money, when invested at a certain rate of compound interest per year, became 1.21 times the sum invested on maturity after two years. What was the rate of compound interest per annum?1. 11%2. 10.5%3. 10%4. 9.9%

Answer» Correct Answer - Option 3 : 10%

Given:

A sum of money, when invested at a certain rate of compound interest per year, became 1.21 times

The sum invested on maturity after two years

Formula used:

Compound interest (A) = Principal amount × [1 + (rate of interest/100)]^t

Calculation:

Principal amount = p

Amount = 1.21P

Time = 2 year

Rate of interest = r

⇒ 1.21P = P [1 + (r/100)]²

⇒ 1.21 = [1 + (r/100)]²

⇒ (1.1)² = [1 + (r/100)]²

⇒ 1.1 = (100 + r)/100

⇒ 110 = 100 + r

⇒ r = 10%

∴The rate of compound interest per annum is 10%

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