CA Foundation · Quantitative Aptitude · Mathematics of Finance
A sum invested at compound interest, compounded annually, grows to ₹6,050 after 2 years and to ₹6,655 after 3 years. What is the rate of interest per annum?
The rate is 10% per annum. Under annual compounding, the amount rises each year by the rate applied to the previous year's amount. The third-year increase is ₹605 on ₹6,050, which is exactly 10%.
- A10%Correct
- B11%
- C9%
- D12%
Explanation
The growth in the third year is 6,655 − 6,050 = 605. Rate = 605/6,050 × 100 = 10%. Check: 6,050/1.1 = 5,500 and 5,500/1.1 = 5,000 principal, consistent. Using 11% would require 6,050 × 1.11 = 6,715.5, not 6,655.
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