Multiple choice

Ramesh borrowed Rs. 3600 at a certain rate of interest C.I. and the sum grows to Rs. 4624 in 2 years. What is the rate of interest?

  1. 12.3%

  2. 13.3%

  3. 14.3%

  4. 15.3%
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B Correct answer
Explanation

The formula for compound interest is A = P(1 + r/100)^n. Here, 4624 = 3600(1 + r/100)^2. Dividing by 3600 gives 4624/3600 = (1 + r/100)^2, which simplifies to 1.2844 = (1 + r/100)^2. Taking the square root gives 1.1333 = 1 + r/100, so r = 13.3%.

AI explanation

The compound interest formula states that Amount equals Principal times (1 + Rate divided by 100) raised to the power of time. Substituting the known values gives 4624 = 3600 times (1 + Rate divided by 100) squared. Taking the square root of both sides results in 68 divided by 60 equaling 1 + Rate divided by 100. Solving this gives a rate of approximately 13.3%.

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