Multiple choice

Annie invested some amount of money in a scheme. A sum of money amounts to Rs. 15,360 after 3 years and to Rs. 21,870 after 6 years on compound interest. Find the rate.

  1. 13.23%

  2. 13%

  3. 12.5%

  4. 12.26%

  5. 10%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A = P(1+r)^n. 15360 = P(1+r)^3 and 21870 = P(1+r)^6. Dividing gives (1+r)^3 = 21870 / 15360 = 1.4238. 1+r = cube root of 1.4238 = 1.125. So r = 0.125 or 12.5 percent.

AI explanation

Using the compound interest growth formula, the amount after 6 years divided by the amount after 3 years equals the total growth factor for the second 3-year period, so 21870 divided by 15360 equals 1.423828125. The annual growth factor is the cube root of 1.423828125, which is 1.125, meaning the annual multiplier is 1.125. Subtracting 1 from this multiplier gives the annual interest rate of 0.125, making the rate 12.5%.

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