Question

The compound interest on ₹40,000 at 6% per annum is ₹4,944. What is the period (in years) for which the amount is invested?

• A. 5 years
• B. 4 years
• C. 3 years
• D. 2 years

Answer 1

Answer:

D. 2 years

Solution:

Given :

Principle = Rs 40000 

Rate of interest = 6% 

Total interest = Rs 4944 

Formula used :

$Amount=P[(1 + \frac{r}{100})^n]$ 

(where P = principle, r = rate of interest and n = number of years)

Calculations :

Total amount = Principle + interest = 40000 + 4944

⇒ 44944 

Now according to the question

$40000[(1+\frac{6}{100})^n]$  = 44944

$(\frac{106}{100})^n=\frac{44944}{40000}$

$(\frac{53}{50})^n=\frac{2809}{2500}$

n = 2 

∴ Period of time is 2 years