Multiple choice

A certain principal is invested in a scheme of compound interest. The amount obtained after 1 year is Rs. 2400 and the amount obtained after 2 years is Rs. 2880. What is the rate of interest (in percentage)?

  1. 20

  2. 15

  3. 25

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

In compound interest, the amount after 2 years is A2 = P(1+r)^2 and after 1 year is A1 = P(1+r). The ratio A2/A1 = 1+r. 2880 / 2400 = 1.2. So 1+r = 1.2, which means r = 0.2 or 20%.

AI explanation

The compound interest formula states that Amount equals Principal times (1 plus R divided by 100) raised to the time, so the ratio of the amounts after 2 years and 1 year gives the annual interest factor. Dividing 2880 by 2400 gives 1.2, which means (1 plus R divided by 100) equals 1.2. Therefore, R equals 0.2 multiplied by 100, which is 20 percent.

Keep practicing — related questions