Question : In how many years will Rs. 2,000 yield Rs. 662 as a compound interest at 10% per annum compounded annually?
Option 1: 3
Option 2: 2
Option 3: 4
Option 4: 5
Correct Answer: 3
Solution :
Rate, R = 10%
Principal amount, P = Rs. 2,000
Compound interest, CI = Rs. 662
When compounded annually, Compound interest after n years = $P[(1+\frac{R}{100})^{n} –1)]$
⇒ $662 = 2000[(1+\frac{10}{100})^{n} –1)]$
⇒ $2662 = 2000(1+\frac{10}{100})^{n})$
⇒ $1.331= (1.1)^{n}$
⇒ $n = 3$ years
Hence, the correct answer is 3 years.
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