Question

At what rate per cent will a sum of ₹ 18750 amount to ₹ 21870 in 2 years compounded annually?

Answer 1

Given, principal = ₹ 18750

Amount = ₹ 21870

Time = 2 years

Amount = `P(1 + R/100)^T`

∴ `18750 (1 + R/100)^2 = 21870`

⇒ `(1 +R/100)^2 = 21870/18750`

⇒ `(1 + R/100)^2 = 729/625`

⇒ `((100 + R)/100)^2 = (27/25)^2`

⇒ `(100 + R)/100 = 27/25`

⇒ `100 + R = (27 xx 100)/25`

⇒ 100 + R = 108

⇒ R = 108 – 100

⇒ R = 8

Hence, the required rate of interest is 8% per annum.