Multiple choice

At what percentage rate, interest compounded annually for a sum of Rs. 40,000, will amount to Rs. 44,100 in two years?

  1. 2

  2. 7.5

  3. 5

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

Using the compound interest formula A = P(1 + r/100)^n, we have 44100 = 40000(1 + r/100)^2. Dividing by 40000 gives 1.1025 = (1 + r/100)^2. Taking the square root, 1.05 = 1 + r/100, so r = 5.

AI explanation

Using the compound interest formula, 44100 equals 40000 times 1 plus R divided by 100 all raised to the power of 2. Dividing both sides by 40000 gives 1.1025 equal to 1 plus R divided by 100 squared. Taking the square root of both sides results in 1.05 equal to 1 plus R divided by 100, which means R equals 5%.

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