Compound Interest Practice Test 2

Question : 6 of 40

Marks: +1, -0

An amount is invested in a bank at compound rate of interest. The total amount, including the interest, after the first and third year is Rs 1,200 and Rs 1,587 respectively. What is the rate of interest?

10%
3.9%
12%
15%

Validate

Solution:

1200=P(1+r/100)^1

⇒1200/P=(1+r/100)

1587=P(1+r/100)^3

...(i)
Substituting the value of

1+r/100

in equation (i),

1587=P(1200/P)^3

1,587P^ 2 = 1,72,80,00,000

P^2={57,60,00,000}/529

P={24,000}/23

P = 1,043.47 ≈ Rs 1,044
Now,

A=P(1+r/100)^t

1200=1044(1+r/100)^1

1200=1044+{1044r}/100

r=156×100/1044

= 14.94≈ 15%

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