Multiple choice

A sum of money is invested at a compound interest payable annually. The interests in successive years were Rs. 225 and Rs. 238.50, respectively. Find the rate percent p.a.

  1. 4%

  2. 5%

  3. 6%

  4. 7%
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C Correct answer
Explanation

The interest for the second year is the interest on the first year's interest. The difference is 238.50 - 225 = 13.50. Rate = (13.50 / 225) * 100 = 6%.

AI explanation

The difference between the compound interest of two successive years equals the interest earned on the first year's interest. The difference is 238.50 - 225 = 13.50, meaning the rate of interest is calculated as (13.50 / 225) * 100. This simplifies to 6, so the rate percent is 6%.

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