Q4 of 27 Page 79

2000 rupees was deposited in a scheme in which interest is compounded annually. After two years the amount in the account was 2200 rupees. What is the rate of interest?

We know that when interest is compounded annually,


Amount = P (1 + )n


Where P = principal, R = rate of interest and n = time in years


Given Amount = 2200 rupees, P = 2000, R = R and n = 2 years


⇒ 2200 = 2000 (1 + )2


⇒ = (1 + )2


⇒ ()2 = (1 + )2


⇒ = 1 +


⇒ – 1 =


⇒ =


We know that √11 ≈ 3.316 and √10 ≈ 3.162.


⇒ =


⇒ =


⇒ 0.04881 =


⇒ 100 × 0.04881 = R


⇒ R = 4.881%


∴ The rate of interest is 4.881%.


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