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If Rs.P amounts to Rs.4P in 12 years at compound interest, the rate per annum is approximately
A12.25%
B16.67%
C10.00%
D25.00%
Answer & Solution
Correct answer: A. 12.25%
1. 4P = P(1 + r)^12, so (1 + r)^12 = 4.
2. Take 12th root: 1 + r = 4^(1/12) = 2^(1/6).
3. 2^(1/6) is approximately 1.1225.
4. r = 0.1225 = 12.25% per annum.
_Source: ICAI BoS Foundation Paper 3, Ch 4 'Math of Finance', p.9_
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