Question:
At what rate percent per annum will a sum of Rs 4000 yield compound interest of Rs 410 in 2 years?
Solution:
Let the rate percent be $\mathrm{R}$.
We know that:
$\mathrm{CI}=\mathrm{P}\left(1+\frac{\mathrm{R}}{100}\right)^{\mathrm{n}}-\mathrm{P}$
$410=4,000\left(1+\frac{\mathrm{R}}{100}\right)^{2}-4,000$
$4,410=4,000\left(1+\frac{\mathrm{R}}{100}\right)^{2}$
$\left(1+\frac{\mathrm{R}}{100}\right)^{2}=\frac{4,410}{4,000}$
$\left(1+\frac{\mathrm{R}}{100}\right)^{2}=1.1025$
$\left(1+\frac{\mathrm{R}}{100}\right)^{2}=(1.05)^{2}$
$1+\frac{\mathrm{R}}{100}=1.05$
$\frac{\mathrm{R}}{100}=0.05$
$\mathrm{R}=5$
Thus, the required rate percent is 5 .