Multiple choice

Rakesh invested Rs. 11250 at compound interest for 2 years that amounts to Rs. 16200. In how much time will the amount become Rs. 19440 at the same rate of interest?

  1. 1 year

  2. 2 years

  3. 3 years

  4. 5 years

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

A = P(1 + r/100)^n. 16200 = 11250(1 + r/100)^2. (1 + r/100)^2 = 1.44. 1 + r/100 = 1.2. r = 20%. Now, 19440 = 11250(1.2)^n. (1.2)^n = 19440 / 11250 = 1.728. Since 1.2^3 = 1.728, n = 3.

AI explanation

The ratio of the amount to the principal after 2 years is 16200/11250 = 1.44, which means the square of the multiplier is 1.44, making the multiplier 1.2. To reach 19440 from 16200, the required multiplier is 19440/16200 = 1.2, which is achieved in exactly one more year. Adding this to the initial 2 years, the total time required is 3 years.

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