Question : A sum of money becomes 1.331 times in 3 years as compound interest. The rate of interest is:
Option 1: 8%
Option 2: 7.5%
Option 3: 10%
Option 4: 50%
Correct Answer: 10%
Solution :
Assuming the principal amount to be Rs. 1000. Then the amount will be Rs. 1331.
When compounded annually, $A= P(1+\frac{R}{100})^{T}$ Where A is the total amount, $P$ is the principal amount, $R$ is the rate of interest per annum, and $T$ is the time in years.
So, $1331=1000(1 + \frac{R}{100})^3$
$⇒\frac{1331}{1000}=(1 + \frac{R}{100})^3$
$⇒(\frac{11}{10})^3=(1 + \frac{R}{100})^3$
$⇒\frac{11}{10}=1 + \frac{R}{100}$
$⇒\frac{R}{100}=\frac{1}{10}$
$⇒R=10$%
Hence, the correct answer is 10%.
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