Question

    A sum of Rs. 7500 was invested at a certain annual compound

    interest rate and earned Rs. 1908 in interest over 2 years. What was the annual rate of interest?
    A 12% Correct Answer Incorrect Answer
    B 25% Correct Answer Incorrect Answer
    C 32% Correct Answer Incorrect Answer
    D 10% Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    ATQ,

    Let the rate of interest is R% per annum.

    According to question,

    7500 × [(1 + R/100)² – 1] = 1908

    (1 + R/100)² – 1 = 159/625

    (1 + R/100)² = 159/625 + 1

    (1 + R/100)² = 784/625

    1 + R/100 = 28/25

    R/100 = 3/25

    R = 12%

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