UP Police Constable Exam Model Paper 2

Given:
Amount in two years = Rs. 1000
Amount in 3 years = Rs. 1250
Formula used:Amount = P(1 + R/100)$\mathrm{T}$
Compound Interest = P((1 + R/100)$\mathrm{T}$ –1)
Calculation:
Amount = P(1 + R/100)${}^{\mathrm{t}}$
1000 = P(1 + R/100)${}^2$ ....(I)
1250 = P(1 + R/100)${}^3$ ....(II)
Dividing equation (II) from (I),
(1 + R/100) = 1250/1000
⇒ R/100 = 5/4–1
⇒ R/100 = 1/4
⇒ R = 25%
∴ The annual rate of interest is 25%.