CA Foundation · Quantitative Aptitude · Equations
Meera borrowed ₹50,000 at a compound interest rate. After 2 years, she owes ₹60,500. If the interest is compounded annually, what is the rate of interest per annum?
The rate of interest is 10% per annum. Using the compound interest formula A = P(1 + r/100)^n, we get (1 + r/100)² = 1.21, so r = 10%.
- A8%
- B10%Correct
- C12%
- D15%
Explanation
Using A = P(1 + r/100)^n, we have 60,500 = 50,000(1 + r/100)². Therefore, (1 + r/100)² = 1.21, so 1 + r/100 = 1.10, giving r = 10% per annum. Common mistakes: confusing with simple interest (would give 10.5%) or calculating √1.21 incorrectly.
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