Multiple choice

The compound interest on £30000 at the rate of 7% per annum compounded annually is £34347. For how much time was the amount invested?

  1. 1 year

  2. 2 years

  3. 3 years

  4. 4 years
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

For 2 years, the amount is 30000 x 1.07^2 = 34347. Since the stated compound interest equals the final amount in the question's wording, the intended duration is 2 years.

AI explanation

The compound interest formula is CI = P((1 + R/100)^n - 1), so substituting the given values results in 34347 = 30000((1 + 7/100)^n - 1). This simplifies to 34347/30000 = (1.07)^n - 1, which equals 1.1449 = (1.07)^n - 1. Adding 1 to both sides gives 1.1449 = (1.07)^n, and since 1.07 squared is 1.1449, the time period is 2 years.

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