Test Index

Time Value of Money

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Question : 43 of 99

Marks: +1, -0

In what time will a sum of

\text{Rs.} 800

5 \%

p.a. compound interest, amount two Rs 882 ?

1 years
5 years
4 years
2 years

Solution:

Concept:

Using the compound interest formula

A = P \left(1 + \frac{r}{100}\right)^t

.

Explanation:

Step 1: Given

P = 800

,

r = 5\%

,

A = 882

.

Step 2: Substitute:

882 = 800 \left(1 + \frac{5}{100}\right)^t = 800 (1.05)^t

.

Step 3: Divide both sides by 800:

\frac{882}{800} = 1.1025 = (1.05)^t

.

Step 4: Since

1.05^2 = 1.1025

, we have

t = 2

years.

Answer:

2 years.

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