Multiple choice

A sum amounts to Rs. 7,562 in 4 years and to Rs. 8,469.44 in 5 years at a certain rate per cent per annum, when the interest is compounded yearly. The rate of interest is:

  1. 12%

  2. 20%

  3. 8%

  4. 15%
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A Correct answer
Explanation

In compound interest, the ratio of amounts after consecutive years equals 1 + R/100. Here, 8,469.44 / 7,562 = 1.12, so 1 + R/100 = 1.12, giving R = 12%. Alternatively: 8,469.44 = 7,562(1 + R/100), so R = 12%.

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