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Simple and Compound Interest
Jameel invested an amount of Rs.17400 for two years. Find the rate of compound interest per annum that will fetch him an amount of Rs.1783.50 as compound interest at the end of two years.
Correct answer: D
Explanation and memory cue
The compound interest (CI) earned is Rs.1783.50 on a principal of Rs.17400 over 2 years. Using the compound interest formula CI = P[(1 + r/100)^n - 1], we have 1783.50 = 17400[(1 + r/100)^2 - 1]. Simplifying gives (1 + r/100)^2 = 1 + 1783.50/17400 = 1.1025. Taking the square root, 1 + r/100 = √1.1025 ≈ 1.05, so r ≈ 5%. Therefore, the correct rate of compound interest per annum is 5% (option D). The originally marked answer (4%) is incorrect based on this calculation.