At what rate per cent per annum will a sum of Rs. 7500 amount to Rs. 8427 in 2 years, compounded annually?
Present value, P = Rs.7500
Amount, A = Rs.8427
Time, n = 2 years
Now,
Amount (A) = P (1 + R/100)n
⇒ 8427 = 7500 (1 + R/100)2
⇒ (1 + R/100)2 = 8427/7500
⇒ (1 + R/100)2 = (53/50)2
⇒ (1 + R/100) = (53/50)
⇒ R/100 = 53/50 – 1
⇒ R/100 = (53 – 50)/50
⇒ R = 3/50 × 100
⇒ R = 6
∴ Rate = 6%