Question:
At what rate percent compound interest per annum will Rs 640 amount to Rs 774.40 in 2 years?
Solution:
Let the rate of interest be $\mathrm{R} \%$.
Then,
$\mathrm{A}=\mathrm{P}\left(1+\frac{\mathrm{R}}{100}\right)^{\mathrm{n}}$
$774.40=640\left(1+\frac{\mathrm{R}}{100}\right)^{2}$
$\left(1+\frac{\mathrm{R}}{100}\right)^{2}=\frac{774.40}{640}$
$\left(1+\frac{\mathrm{R}}{100}\right)^{2}=1.21$
$\left(1+\frac{\mathrm{R}}{100}\right)^{2}=(1.1)^{2}$
$\left(1+\frac{\mathrm{R}}{100}\right)=1.1$
$\frac{\mathrm{R}}{100}=0.1$
$\mathrm{R}=10$
Thus, the required rate of interest is $10 \%$ per annum.