Multiple choice

A sum of money put out at compound interest, in 2 years, amounts to Rs. 578.40 and in 3 years to Rs. 614.55. Find the rate of interest.

  1. 6.25%

  2. 5.17%

  3. 4.97%

  4. 3.50%
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A Correct answer
Explanation

In 2 years, A = P(1+r)^2 = 578.40. In 3 years, A = P(1+r)^3 = 614.55. Dividing the two: 1+r = 614.55 / 578.40 = 1.0625. So r = 0.0625 or 6.25%.

AI explanation

Using the compound interest proportion between consecutive years, the amount for 3 years divided by the amount for 2 years equals (1 plus R divided by 100), so 614.55 divided by 578.40 gives 1.0625. This means the interest rate R is 0.0625 multiplied by 100, which equals 6.25 percent. The rate of interest is 6.25 percent.

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