If the amount after 2 years at compound interest is Rs. 1210 and the principal i

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Question: If the amount after 2 years at compound interest is Rs. 1210 and the principal is Rs. 1000, what is the rate of interest?

Options:

Correct Answer: 10%

Solution:

Using the formula A = P(1 + r)^t, we have 1210 = 1000(1 + r)^2. Solving gives r = 0.1 or 10%.

If the amount after 2 years at compound interest is Rs. 1210 and the principal is Rs. 1000, what is the rate of interest?

If the amount after 2 years at compound interest is Rs. 1210 and the principal is Rs. 1000, what is the rate of interest?

Step 1: Identify the given values. The amount after 2 years (A) is Rs. 1210, and the principal (P) is Rs. 1000.
Step 2: Write down the formula for compound interest: A = P(1 + r)^t.
Step 3: Substitute the known values into the formula: 1210 = 1000(1 + r)^2.
Step 4: Divide both sides by 1000 to isolate (1 + r)^2: (1 + r)^2 = 1210 / 1000.
Step 5: Calculate 1210 / 1000, which equals 1.21. Now we have (1 + r)^2 = 1.21.
Step 6: Take the square root of both sides to solve for (1 + r): 1 + r = √1.21.
Step 7: Calculate the square root of 1.21, which is 1.1. So, 1 + r = 1.1.
Step 8: Subtract 1 from both sides to find r: r = 1.1 - 1.
Step 9: Calculate r, which equals 0.1.
Step 10: Convert r to a percentage by multiplying by 100: r = 0.1 * 100 = 10%.

Compound Interest – Understanding the formula for compound interest and how to manipulate it to find the rate of interest.