Question

In how many years will ₹ 7500 borrowed at 20% p.a. compounded yearly will amount to ₹ 10800?

Options

• 1 year

• `1^(1//2)` years

• 2 years

• 3 years

Answer 1

2 years

Explanation:

Step 1: Compound interest formula

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

Where:

• A = 10,800 (Amount after n years)
• P = 7,500 (Principal)
• r = 20%
• n = ? (Number of years)

Step 2: Substitute values

`10,800 = 7,500(1 + 20/100)^n`

`10,800 = 7,500 xx (1.2)^n`

Step 3: Divide both sides by 7,500

`(10,800)/(7,500) = (1.2)^n`

`1.44 = (1.2)^n`

Step 4: Solve for n

We know that:

1.2² = 1.2 × 1.2

= 1.44

∴ n = 2