Question

In how many years a sum Rs. 5000 amounts to Rs. 8640 at 20% interest rate compounded annually?
1. 2 years
2. 3 years
3. 4 years
4. 5 years

Answer 1

Correct Answer - Option 2 : 3 years

Given:

Principal = Rs. 5000

Rate = 20%

Amount = Rs. 8640

Formula used:

A = P{1 + (r/100)}t

Here, 

A = Amount

P = Principal

r = Rate

t = Time

Calculation:

According to the formula, we have

A = Rs. 5000{1 + (20/100)}t

⇒ Rs. 8640 = Rs. 5000{1 + (1/5)}t

⇒ (8640/5000) = (6/5)^t 

⇒ (6/5)t = (216/125)

⇒ (6/5)t = (6/5)³ 

⇒ t = 3

∴ The required time is 3 years.