CAT 1991 — QA Question 42
Compound InterestEasy
A sum of money compounded annually becomes Rs. 625 in two years and Rs. 675 in three years. The rate of interest per annum is
Answer & solution
Correct answer: 8%
- A
7%
8%
- C
6%
- D
5%
Solution
For a difference of 1 year, CI can be computed as SI.
Hence, from the 2nd year to the 3rd year interest earned = (675 – 625) = Rs. 50 on Rs. 625.
Hence the Rate of interest 50/625 × 100 = 8% p.a.
Hence, option (b).