In how many years will Rs. 6250 amount to Rs. 7290 at 8% per annum, compounded annually?
Let time = n years
P = Rs.6250
A = Rs.7290
R = 8% per annum
Now,
Amount (A) = P (1 + R/100)n [Where, A = Amount with compound interest
P = Present value
R = Annual interest rate
n = Time in years]
∴ A = P (1 + R/100)n
⇒ 7290 = 6250 (1 + 8/100)n
⇒ (1 + 2/25)n = 7290/6250
⇒ (27/25)n = 729/625
⇒ (27/25)n = (27/25)2
⇒ n = 2
∴ Time = 2 years.