Multiple choice

A sum of Rs. 1089 becomes Rs. 1296 in two years at a compound interest, which is compounded annually. The rate of interest will be

  1. 8%

  2. 10%

  3. 9.09%

  4. 11%

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Using the compound interest formula, the ratio of the amount to the principal after two years is 1296/1089, which simplifies to (36/33)^2 or (12/11)^2. Taking the square root of both sides gives 1 + R/100 = 12/11, which simplifies to R/100 = 1/11. This yields an annual interest rate of approximately 9.09%.

AI explanation

Using the compound interest formula, Amount equals Principal multiplied by (1 plus r divided by 100) squared, so 1296 equals 1088 multiplied by (1 plus r divided by 100) squared. This simplifies to 1296 divided by 1089 equaling (1 plus r divided by 100) squared, so the ratio of amount to principal is approximately 1.19. Taking the square root gives 1 plus r divided by 100 equals 1.0909, meaning the rate r is 9.09 percent. The result is 9.09 percent.

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