In how may years will a sum of Rs. 320 amount to Rs. 405 if interest is compounded at 12.5% per annum?
1. 2(1/2) years
2. 2 years
3. 1 year
4. 1(1/2) years
1. 2(1/2) years
2. 2 years
3. 1 year
4. 1(1/2) years
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Correct Answer – Option 2 : 2 years
Given:
Sum = Rs. 320
Amount = Rs. 405
Rate of interest = 12.5%
Formula Used:
If am = an, then
m = n
Amount = P × (1 + r%/100)t
⇒ P → Principal, r% → Rate of interest per annum, t → Time period
Calculations:
Let the time period be t years.
Amount = P × (1 + r%/100)t
⇒ 405 = 320 × (1 + 12.5/100)t
⇒ 405/320 = (9/8)t
⇒ 81/64 = (9/8)2 = (9/8)t
⇒ t = 2 years
∴ The time in which a sum of Rs. 320 amount to Rs. 405 is 2 years.