Multiple choice

If a certain sum of money invested at compound interest for 5 years becomes Rs. 5460 and for 6 years becomes Rs. 6490, then what will be the rate per annum?

  1. 5.86%

  2. 6.02%

  3. 10.24%

  4. 18.86%

  5. 19.03%
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A = P(1+r)^n. 5460 = P(1+r)^5, 6490 = P(1+r)^6. (1+r) = 6490/5460 = 1.1886. r = 18.86 percent.

AI explanation

The interest earned in the 6th year is 6490 - 5460 = 1030. Because this is compound interest, the rate is 1030/5460 = 0.18864. The annual rate of interest is 18.86%.

Keep practicing — related questions