Q. A sum of 8000 Rs. will amount to 8820 Rs. in 2 years if the interest is calculated every year. The rate of compound interest is :
Answer: 5%
Notes: If the rate of CI be r% per annum, then
$latex A = P \left ( 1+\frac{R}{100} \right )^{T}&s=1$
$latex => 8820 = 8000\left ( 1+\frac{r}{100} \right )^{2}&s=1$
$latex => \frac{8820}{8000} = \left ( 1+\frac{r}{100} \right )^{2}&s=1$
$latex => \frac{441}{400} = \left ( \frac{21}{20} \right )^{2} = \left ( 1+\frac{r}{100} \right )^{2}&s=1$
$latex => 1+\frac{r}{100} = \frac{21}{20}&s=1$
$latex => \frac{r}{100} = \frac{21}{20}-1 = \frac{1}{20}&s=1$
$latex => r = \frac{1}{20}\times 100 = 5\%\ per\ annum&s=1$
Hence option [B] is correct answer.
