An amount of Rs $16000$ grows to Rs $17640$ in $2$ years at compound interest. The annual rate is:

Question

An amount of Rs $16000$ grows to Rs $17640$ in $2$ years at compound interest. The annual rate is:

Option A

4%

Option B — Correct answer

5%

Correct choice.

Option C

6%

Option D

7%

Explanation

We have $17640=16000\left(1+\frac{r}{100}\right)^2$, so $\left(1+\frac{r}{100}\right)^2=\frac{1764}{1600}=1.1025=(1.05)^2$. Hence $r=5\%$.

Chapter Mock 5: Simple Interest and Compound Interest