By Mansi Yadav

Verified by Ajay Kumar

Find the rate of interest if ₹1,000 amounts to ₹1,210 in 2 years, compounded annually.

  1. 7%

  2. 15%

  3. 13%

  4. 10%

Answer: D

Solution

Solution: Using \(A=P(1+\frac{r}{100})^n\), we get \(1210=1000(1+\frac{r}{100})^2\). Thus, \((1+\frac{r}{100})^2=1.21\Rightarrow1+\frac{r}{100}=1.1\Rightarrow r=10\%\). Trick: The compound growth factor over two years is 1.21, whose square root is 1.1.

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