Multiple choice

A sum of money, at compound interest, yields Rs. $200$ and Rs. $220$ at the end of first and second year respectively. The rate $\%$ is:

  1. 20

  2. 15

  3. 10

  4. 5
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In compound interest, the amount or interest grows by the factor (1 + R/100) each year. The ratio of the yield in the second year to the first year is 220 / 200 = 1.1, which corresponds to a rate of 10%.

AI explanation

The difference between the second year's interest and the first year's interest at compound interest is the interest earned on the first year's interest. The difference is Rs. 220 minus Rs. 200, which equals Rs. 20. Since this Rs. 20 was earned on the initial Rs. 200, the rate of interest is (20 / 200) x 100, resulting in 10 percent.

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