Question

At what rate percent compound interest, does a sum of money become 1.44 times of itself in 2 years?

Answer 1

Let Principal = Rs. y

Then Amount = Rs 1.44y

n = 2 years

∴ Amount = `P(1 + r/100 )^n`

⇒ `1.44y = y( 1 + r/100)^2`

⇒ `[1.44y]/y = (1 + r/100)^2`

⇒ `36/25 = (1 + r/100)^2`

⇒ `(6/5 )^2 = (1 + r/100)^2`

On comparing,

`6/5 = 1 + r/100`

On solving, we get

r = 20 %