At what rate of interest will be Rs 20000 becomes Rs 24200 after 2 years when interest is compounded annually?
Correct answer: C. 10%
- A. 5%
- B. 6%
- C. 10%
- D. 15%
Explanation
The growth factor over 2 years is 24,200 Rs / 20,000 Rs = 1.21. Therefore, (1 + r)^2 = 1.21, so 1 + r = 1.10 and r = 10% per year. Students may choose 6% by dividing the total increase of 4,200 Rs by 2 years without allowing for annual compounding.
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About Percentages
Percentages express a quantity as parts per hundred and support calculations involving increases, decreases, discounts, commissions, taxes, and successive changes. Questions require distinguishing percentage change from percentage points and identifying the original value when a final value and its percentage change are given.
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