Question

In how may years shall Rs. 5000 invested at the rate of 10% compound interest per annum, amount to Rs. 6,655 ?
1. 2 years
2. 2.5 years
3. 3 years
4. 4 years

Answer 1

Correct Answer - Option 3 : 3 years

Given:

Principle is Rs. 5,000

Rate is 10%

Amount is Rs. 6,655

Formula Used:

For Compound Interest,

Amount = P(1 + R/100)ⁿ

where,

P is Principle

R is Rate

n is number of years

Calculation:

Amount = P(1 + R/100)n

⇒ 6,655 = 5,000(1 + 10/100)ⁿ

⇒ 6,655/5,000 = (1 + 1/10)ⁿ

⇒ 1331/1000 = (11/10)ⁿ

⇒ (11/10)³ = (11/10)n

⇒ n = 3

∴ Total number of years required is 3 years.