Q.If the principal amount of **₹400** becomes **₹441** in 2 years under compound interest, determine the annual percentage rate of compound interest.

Let the interest rate be \(r\%\)
\(∴ 400\left(1+\cfrac{r}{100}\right)^2=441\)
Or, \(\left(1+\cfrac{r}{100}\right)^2=\cfrac{441}{400}\)
Or, \(\left(1+ \cfrac{r}{100}\right)=\cfrac{21}{20}\)
Or, \(\cfrac{r}{100}=\cfrac{21}{20}-1\)
Or, \(\cfrac{r}{100}=\cfrac{1}{20}\)
Or, \(r=5\)

∴ The annual percentage rate of interest is 5%.
Similar Questions