Multiple choice

A person borrowed a certain amount of money from a friend at compound interest. If the amount was compounded to Rs. 10,000 after 5 years and to Rs. 14,400 after 7 years, find the rate of interest per annum.

  1. 12%

  2. 20%

  3. 15%

  4. 25%

  5. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Amount after 7 years = Amount after 5 years * (1+r)^2. 14400 = 10000 * (1+r)^2. (1+r)^2 = 1.44. 1+r = 1.2, so r = 0.2 or 20%.

AI explanation

The amount increases from 10000 in year 5 to 14400 in year 7, meaning it grows by a factor of 14400 / 10000 = 1.44 over two years. Using the compound interest formula, the square root of 1.44 gives the annual growth factor of 1.20. This corresponds to a rate of interest of 20 percent per annum. The result is 20 percent.

Keep practicing — related questions