1.

If a sum of money compounded annually comes 1.96 times of itself in 2 years, then the rate of interest per annum is1). 42%2). 30%3). 14%4). 40%

Answer»

We KNOW that, Compounded amount, $(A\; = \;P{\left[ {1 + \FRAC{r}{{100}}} \right]^t})$

Where, P = Principal amount, r = % rate of interest, t = time in years

Given, a sum of money compounded annually comes 1.96 times of itself in 2 years

$(P{\left[ {1 + \frac{r}{{100}}} \right]^2} = 1.96\;P)$ 

$(\RIGHTARROW {\left[ {1 + \frac{r}{{100}}} \right]^2} = 1.96)$ 

$(\Rightarrow \frac{{100\; + \;r}}{{100}}\; = \;1.4)$ 

⇒ 100 + r = 140

⇒ r = 40


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