A sum of ₹10,000 amounts to ₹11,025 in 2 years at a certain rate of interest per annum, compounded annually. The rate of interest per annum is:

Correct option is C

Given:

Principle sum = ₹10,000

Amount = ₹11,025

Time = 2 years

Formula Used:

Compounded Amount = $$Principle \times \left(1+ \frac{r}{100}\right)^{t}$$​​

Amount = Principle + Interest

Solution:

Compounded Amount =$$10000 \times \left(1+ \frac{r}{100}\right)^{2}$$​​

​$$11025= 10000 \times \left(1+ \frac{r}{100}\right)^{2}$$​​

​$$11025= 10000 \times \left(1+ \frac{r}{100}\right)^{2}$$​​

​$$\frac{11025}{10000} = \left(1+ \frac{r}{100}\right)^{2}$$​​

​$$\left(\frac{105}{100}\right)^2 =\left(1+ \frac{r}{100}\right)^{2}$$​​

​$$\frac{105}{100} = \left(1+ \frac{r}{100}\right)$$​​

​$$\frac{105}{100} -1 = \frac{r}{100}$$​​

​$$\frac{105-100}{100} = \frac{r}{100}$$​​

​$$\frac{5}{100} = \frac{r}{100}$$​​

r = 5% p.a.