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If Rs. 500 amounts to Rs. 583.20 in two years compounded annually, find the rate of interest per annum.



Options:
A .  5
B .  6
C .  7
D .  8
Answer: Option D

Principal = Rs. 500; Amount = Rs. 583.20; Time = 2 years.
Let the rate be R% per annum.
[ 500 (1+(R/100)^2 ] = 583.20 or
[ 1+ (R/100)]^2 = 5832/5000 = 11664/10000
[ 1+ (R/100)]^2 = (108/100)^2
1 + (R/100) = 108/100
R = 8




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