Calculate at what rate of compound interest Rs. 5000 amount to Rs. 5832 in 2 years.

Explanation

Let the compound inteest be r% .
`:.` The amount of Rs. 5000 in 2 years `=Rs. 5000xx(1+r/100)^(2)`
As per question `5000xx(1+r/100)^(2)=5832`
or `(1+r/100)^(2)=5832/5000`
or `(1+r/100)^(2)=726/625`
or `(1+r/100)^(2)=(27/25)^(2)`
or `1+r/100=27/25` [ by taking square root of both of the sides]
or `r/100=27/25-1` ltbgt or `r/100=2/25` or `r=(2xx100)/25=8`
Hence the rate of compound interest is 8% per annum.