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- In this question, the formula is when the interest is compounded annually to solve this problem of compound interest.
Question 1:
In this question, the formula is when the interest is compounded annually to solve this problem of compound interest. 4. At what rate per cent per annum will Ron lends a sum of $2000 to Ben. Ben returned after 2 years $2205, compounded annually? A. 7%
B. 5%
Feedback Let the required rate be R% per annum
Here, A = $ 2205, P = $ 2000 and n = 2 years
Using the formula A = P(1 + R/100)n,
2205 = 2000 × ( 1 + R/100)²
(1 + R/100)² = 2205/2000 = 441/400 = (21/20)²
( 1 + R/100) = 21/20
R/100 = (21/20 – 1) = 1/20
R = (100 × 1/20) = 5
Hence, the required rate of interest is 5% per annum
Here, A = $ 2205, P = $ 2000 and n = 2 years
Using the formula A = P(1 + R/100)n,
2205 = 2000 × ( 1 + R/100)²
(1 + R/100)² = 2205/2000 = 441/400 = (21/20)²
( 1 + R/100) = 21/20
R/100 = (21/20 – 1) = 1/20
R = (100 × 1/20) = 5
Hence, the required rate of interest is 5% per annum
C. 6%
D. 4%
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