Multiple choice

A principal of Rs. 2500 amounts to Rs. 2809 in two years at a certain rate of interest when compounded annually. Find the rate of interest.

  1. 3%

  2. 4%

  3. 5%

  4. 6%

  5. None of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Using the compound interest formula A = P(1 + r/100)^n, we have 2809 = 2500(1 + r/100)^2. Dividing by 2500 gives 1.1236 = (1 + r/100)^2. Taking the square root, 1.06 = 1 + r/100, so r = 6%.

AI explanation

Using the compound interest formula A equals P multiplied by (1 plus R divided by 100) raised to the time, we substitute 2809 equals 2500 multiplied by (1 plus R divided by 100) squared. Taking the square root gives 53 divided by 50 equals 1 plus R divided by 100. Solving this yields R equals 6 percent. The rate of interest is 6 percent.

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