Multiple choice

A sum of money become 17280 rupees after 2 years and become 24883.2 rupees after 4 year if the rate of interest is compounded annually. Find the rate of interest.

  1. 15%

  2. 20%

  3. 25%

  4. 22.5%

  5. 27.5%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

For compound interest, if amount after 2 years is 17280 and after 4 years is 24883.2, the ratio of amounts after successive 2-year periods should be constant. Testing 20%: 17280 × 1.2 = 20736.04; then 20736.04 × 1.2 = 24883.2. This confirms 20% is correct. Working backwards: If principal is P, then P × (1.2)² = 17280, so P = 12000.

Keep practicing — related questions