Multiple choice

At what rate of compound interest per annum will a sum of Rs. 50,000 become Rs. 73,205 in 2 years?

  1. 21%

  2. 19%

  3. 17%

  4. 15%
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A Correct answer
Explanation

73205 = 50000 * (1 + r/100)^2. (1 + r/100)^2 = 73205 / 50000 = 1.4641. 1 + r/100 = sqrt(1.4641) = 1.21. r/100 = 0.21, so r = 21%.

AI explanation

Using the compound amount formula, we set 73205 equal to 50000 multiplied by 1 plus the rate, all squared. This simplifies to 1 plus the rate equaling the square root of 1.4641, which is 1.21. Subtracting 1 gives the annual rate of 21 percent.

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