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A sum of money compounded annually becomes Rs. 625 in 2 years and Rs. 675 in 3 years. The rate of interest per annum is
- a)7%
- b)10%
- c)6%
- d)8%
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
A sum of money compounded annually becomes Rs. 625 in 2 years and Rs. ...
For a difference of 1 year, CI can be computed as SI. Hence From the 2nd year to the 3rd year, interest earned = (675-650) = Rs.50 on Rs.625
which is the interest component
Hence, the rate of interest = 50/625x100 = 8% per annum
Alternative method :
Since the values are for consecutive years,
which is the interest component1/25 = 4%
∴ 2/25 = 8%
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Community Answer
A sum of money compounded annually becomes Rs. 625 in 2 years and Rs. ...
Let's assume the principal amount is P and the rate of interest per annum is R%.
The formula to calculate compound interest is given by:
A = P(1 + R/100)^n
Where,
A = the final amount after n years
P = the principal amount
R = the rate of interest per annum
n = the number of years
We are given that the amount becomes Rs. 625 in 2 years and Rs. 675 in 3 years. Let's calculate the compound interest for both cases.
For 2 years:
625 = P(1 + R/100)^2
For 3 years:
675 = P(1 + R/100)^3
Now, let's solve these equations to find the value of R.
Dividing the equation for 3 years by the equation for 2 years, we get:
675/625 = (P(1 + R/100)^3)/(P(1 + R/100)^2)
Simplifying further:
27/25 = (1 + R/100)
Now, let's isolate R:
27/25 - 1 = R/100
2/25 = R/100
R = (2/25) * 100
R = 8
Therefore, the rate of interest per annum is 8%.
Hence, the correct answer is option D) 8%.
The formula to calculate compound interest is given by:
A = P(1 + R/100)^n
Where,
A = the final amount after n years
P = the principal amount
R = the rate of interest per annum
n = the number of years
We are given that the amount becomes Rs. 625 in 2 years and Rs. 675 in 3 years. Let's calculate the compound interest for both cases.
For 2 years:
625 = P(1 + R/100)^2
For 3 years:
675 = P(1 + R/100)^3
Now, let's solve these equations to find the value of R.
Dividing the equation for 3 years by the equation for 2 years, we get:
675/625 = (P(1 + R/100)^3)/(P(1 + R/100)^2)
Simplifying further:
27/25 = (1 + R/100)
Now, let's isolate R:
27/25 - 1 = R/100
2/25 = R/100
R = (2/25) * 100
R = 8
Therefore, the rate of interest per annum is 8%.
Hence, the correct answer is option D) 8%.
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A sum of money compounded annually becomes Rs. 625 in 2 years and Rs. 675 in 3 years. The rate of interest per annum isa)7%b)10%c)6%d)8%Correct answer is option 'D'. Can you explain this answer?
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