Compound Interest Practice Test 1

Question : 7 of 40

Marks: +1, -0

Madhav lent Rs 1,000 to his friend at 10% p.a. compound interest on a condition that he will double the money at the end of each year. Find the actual rate of interest charged by Madhav.

80%
50%
120%
150%
Cannot be determined

Validate

Solution:

\table \Rs 1000,→,\Rs 1100; ,,↓; ,,\Rs 2200,→,\Rs 2420; ,,,,↓;,,,,\Rs 4840,→,\Rs 5324;,,,,,, ↓;,,,,,, \Rs 10648

Madhav lent Rs 1,000 and got Rs 10,648 at the end of 3 years.
So,

10,648=1000(1+r/100)^3

(11/5)^3=(1+r/100)^3

r=120%

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