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Rs.16000 grows at compound interest to Rs.20736 in 2 years. The rate per annum is
A12.00%
B13.78%
C15.00%
D10.00%
Answer & Solution
Correct answer: B. 13.78%
1. 20736 = 16000 * (1 + r)^2.
2. (1 + r)^2 = 20736/16000 = 1.296.
3. 1 + r = sqrt(1.296) = 1.1383.
4. r = 0.1383, i.e. approximately 13.78%.
_Source: ICAI BoS Foundation Paper 3, Ch 4 'Math of Finance', p.8_
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