Multiple choice

A sum of Rs. 400 amounts to Rs. 441 in 2 years. What will it amount to if the rate of interest is increased by 5%?

  1. Rs. 484

  2. Rs. 560

  3. Rs. 512

  4. Rs. 504
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A Correct answer
Explanation

Amount = Principal(1 + rate/100)^time. From 441 = 400(1 + r/100)^2, we get 1.05 = 1 + r/100, so r = 5%. New rate = 10%, new amount = 400(1 + 10/100)^2 = 400(1.1)^2 = 400 × 1.21 = 484. This uses compound interest formula.

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