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Simple & Compound Interest · Question 35 of 60

Question 35

MediumOriginal question

At what rate per annum, compounded annually, will ₹6,250 amount to ₹7,290 in 2 years?

4%Correct answerYour answer8%Correct answerYour answer8.32%Correct answerYour answer16.64%Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer B

Correct answer: B

$(1 + \frac{R}{100})^2 = \frac{7290}{6250} = \frac{729}{625}$ .
Taking square roots: $1 + \frac{R}{100} = \frac{27}{25} = 1.08$ .
$R = 8\%$ per annum.

Worth noting

8.32% treats the growth as simple interest $(16.64\% \div 2)$ . With compounding, take the square root of the growth factor instead of halving.

Concept: Finding the rate from principal and amount at compound interest
Typical timeTypical: 60 s
Your timeYours: —

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