Question

A sum of money amounts to Rs.4840 in 2 years and Rs.5324 in 3 years at compound
interest compounded annually. What is the rate of interest per annum?
A. 8
B. 10
C. 12
D. 15

Answer 1

Hint: In this problem, we have to find the rate of interest per annum. Since the compounded
amount after second year and third year are given, so by subtracting we get the amount of
interest. After that by dividing the amount of interest by the compounded amount after second
year, we get the required rate of interest.
It is given that money amount after second year = Rs.4840 (1)
Money amount after third year = Rs.5324 (2)
Now, we have to find the amount of interest.
Subtracting equation (2) from equation (1).
Amount of interest $ = Rs.5324 - Rs.4840 = Rs.484$

Now, calculating for the rate of interest. Dividing the amount of interest by the compounded
amount after second year.
Rate of interest
 $\begin{array}{c} = \dfrac{{484}}{{4840}} \times 100\\ =
\dfrac{{100}}{{10}}\\ = 10\% \end{array}$

Thus, the rate of interest per annum is 10%.

Hence, the correct option is B.
Note: Here, we have to determine the rate of interest per annum for the given data. Since the
compounded amount after second year and third year are given. But to find the rate of interest,
we should know the interest amount. Once we get the amount of interest, we can easily find the
rate of interest.