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Mathematics

A certain sum of money amounts to ₹ 5000 at the end of 5th year and to ₹ 6000 at the end of 6th year. The rate of interest is :

  1. 120%

  2. 20%

  3. 1.2%

  4. 12%

Compound Interest

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Answer

Difference between amounts of two successive years = ₹ 6000 - ₹ 5000 = ₹ 1000

∴ ₹ 1000 is the interest of one year on ₹ 5000.

By formula,

Rate of interest = 100×IP×T=100×10005000×1\dfrac{100 \times I}{P \times T} = \dfrac{100 \times 1000}{5000 \times 1} = 20%.

Hence, Option 2 is the correct option.

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