Question

At what rate percent per annum compound interest will ₹ 8000 amount to ₹ 10125 in 2 years?

Answer 1

Given:

• Principal (P) = ₹ 8000
• Amount (A) = ₹ 10125
• Time (n) = 2 years
• Rate of interest = r% per annum to be found

Step-wise calculation:

1. Use the compound interest formula for amount:

`A = P(1 + r/100)^n`

2. Substitute the given values:

`10125 = 8000(1 + r/100)^2`

3. Divide both sides by 8000:

`10125/8000 = (1 + r/100)^2`

`1.265625 = (1 + r/100)^2`

4. Take square root on both sides:

`sqrt(1.265625) = 1 + r/100`

`1.125 = 1 + r/100`

5. Solve for r:

`r/100 = 1.125 - 1`

`r/100 = 0.125`

r = 0.125 × 100

r = 12.5%