alleryAt what rate compounded annually will Rs.1000 grow to Rs.1210 in 2 years?
A5%
B8%
C12%
D10%
Answer & Solution
Correct answer: D. 10%
1. 1210 = 1000 * (1 + r)^2.
2. (1 + r)^2 = 1.21.
3. Taking square root: 1 + r = 1.10.
4. So r = 0.10 = 10% per annum.
_Source: ICAI BoS Foundation Paper 3, Ch 4 'Math of Finance', p.8_
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