The rate of compound interest p.a. at which a sum of 1,200 will become 1,348.32 in 2 years is:

Correct option is A

​Given:

Principal P = 1200

Amount A = 1348.32

Time = 2 year

Formula Used:

$$A = P \left(1 + \frac{R}{100}\right)^T$$​​

Solution:

$$1,348.32 = 21,200 \left(1 + \frac{R}{100}\right)^2$$​

​$$\frac{1,348.32}{1,200} = \left(1 + \frac{R}{100}\right)^2 \\ \ \\ 1.1236 = \left(1 + \frac{R}{100}\right)^2$$​​

​$$\sqrt{1.1236} = 1 + \frac{R}{100}$$​

$$\frac{R}{100} = 1.06 - 1$$

$$R=0.06×100=6\%$$​%

Thus rate of compound interest is 6% per annum.