If a sum of Rs.3,500 is invested at 5% compound interest per annum, compounded annually, then what is the period for which the compound interest is Rs. 358.75?

Correct option is B

Given:

P = 3500 

Compound intrest CI = 358.75

Interest rate r = 5%

Formula used:

compound interest = P $$(1+\frac{r}{100})^t$$

Solution:

Compound Interest=A−P

358.75=A−3500

A= 3500 + 358.75

= 3858.75

Now,

3858.75 = 3500 $$(1+\frac{5}{100})^t$$

3858.75 = 3500 $$(1+0.05)^t$$

3858.75 = 3500$$(1.05)^t$$

$$\frac{3858.75}{3500}$$ = ​​$$(1.05)^t$$

1.1025 = $$(1.05)^t$$​ 

(1.05)² = $$(1.05)^t$$​​ 

comparing the power 

t = 2 year = 24 month 

The time period is 24 month 

Thus, correct option is (b)