Question

A certain amount grows to ₹6400 in 2 years and ₹7040 in 3 years. Determine the interest rate.

• A. 10%
• B. 9%
• C. 8%
• D. 11%

Answer 1

Answer:

A. 10%

Let the principal be (P) and the compound interest rate be (r%) per year.

Given:

• Amount after 2 years = ₹6400

• Amount after 3 years = ₹7040

Step 1: Find growth factor for 1 year

$\frac{7040}{6400} = 1.1$

So the amount increases by 10% per year.

Step 2: Interest rate

r = 10%

Step 3 (check quickly)

If 2nd year amount is 6400, then:
$6400 \times 1.1 = 7040$

$Interest rate = (\boxed{10\% \text{ per annum}})$