Multiple choice

What will be the ratio of amount and the principal in n years at 5% p.a. rate of compound interest?

  1. $(22)^n : (21)^n$
  2. $(20)^n : (21)^n$
  3. $(21)^n : (20)^n$

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For compound interest, Amount = Principal × (1 + rate/100)^time. At 5% for n years, this becomes P × (21/20)^n. The ratio of Amount to Principal is (21)^n : (20)^n.

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