Question

A sum of money amounts to Rs. 12,100 in 2 years and Rs. 13,310 in 3 years, when compounded annually. Find the rate of interest.
1. 12%
2. 9%
3. 10%
4. 8%

Answer 1

Correct Answer - Option 3 : 10%

Given:

Amount in 2 years = Rs.12100

Amount in 3 years = Rs.13310 

Formula:

Let P = Principal, R = Rate of interest and N = time

Amount = P(1 + R/100)ⁿ

Calculation:

⇒ 12100 = P(1 + R/100)² ----(1)

⇒ 13310 = P(1 + R/100)³  ----(2)

Dividing equation (2) by (1),

⇒ 1.1 = (1 + R/100)

⇒ 0.1 = R/100

⇒ R = 10

∴ Rate of interest is 10% per annum.