Multiple choice

A certain sum of money is invested at an annual interest rate of r%. After 3 years, the amount becomes 33.1% more than the original sum. If the interest is compounded annually, find the value of r.

  1. 13.31

  2. 11.11

  3. 11

  4. 10

  5. a
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D Correct answer
Explanation

Amount = P(1 + r/100)^3. Given A = 1.331P, then (1 + r/100)^3 = 1.331. Since 1.1^3 = 1.331, 1 + r/100 = 1.1, so r/100 = 0.1 and r = 10.

AI explanation

Let the sum be P, so the amount after 3 years is 1.331P. Using the compound interest formula A = P(1 + r/100)^3, we have 1.331P = P(1 + r/100)^3, which simplifies to (1 + r/100)^3 = 1.331. Taking the cube root gives 1 + r/100 = 1.1, so r/100 = 0.1 and r = 10.

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