The compound interest accrued in two years on a principal amount of ₹16,250 is ₹5,616. What is the rate of interest p.c.p.a?

Options

A. 0.22
B. 0.16
C. 0.18
D. Cannot be determined

Answer

B

Explanation

`A = P [ 1+ R/100]^(T)`
` Rightarrow 16250 + 5616 = 16250 ( 1+ R/100)^(2)`
` Rightarrow 21866/16250 = ( 1+ R/100)^(2)`
` Rightarrow 841/625 = ( 1+ R/100)^(2)`
` Rightarrow (29/25)^(2) = ( 1+ R/100)^(2)`
` Rightarrow 1+ R/100 = 29/25`
` Rightarrow R/100 = 29/25 -1 = 4/25`
`Rightarrow R = 4/25 xx 100 = 16 % " per annum"`
Alternate Method :
` 5616/16250 = 34.56%
In two years, at the rate of 16% p.a.
we get interest of 34.56%
Rate = 16%