Question

The cost of a raw material increased with equal percentage in two years. The price increased to ₹145.20 from ₹120. What is the equal annual percentage increase?

• A. 10.5%
• B. 10%
• C. 11.5%
• D. 11%

Answer 1

Answer:

B. 10%

Let the annual increase rate be ( r ).

Since the increase is compounded equally for 2 years:

$120 \times (1 + r)^2 = 145.20$

$(1 + r)^2 = \frac{145.20}{120} = 1.21$

$1 + r = \sqrt{1.21} = 1.1$

$r = 0.1 = 10\%$

Answer: 10%