Multiple choice

At what rate of interest compounded yearly will Rs. 80,000 amount to Rs. 88,200 in 2 years?

  1. 1%

  2. 5%

  3. 8%

  4. 10%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A = P(1 + r/100)^n. 88200 = 80000(1 + r/100)^2. 882/800 = (1 + r/100)^2. 441/400 = (1 + r/100)^2. (21/20)^2 = (1 + r/100)^2. 1 + r/100 = 1.05. r = 5%.

AI explanation

Using the compound interest formula, Amount equals Principal times 1 plus Rate over 100 raised to the power of the time. Dividing 88200 by 80000 gives 1.1025, which equals 1 plus Rate over 100 squared. Taking the square root of both sides reveals that 1 plus Rate over 100 equals 1.05. Solving for the rate gives 5%.

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