# Find out the interest rate:

If Rs. 500 amount to Rs. 583.20 in 2 years compounded annually, find the rate of interest per annum:

- 9%
- 8%
- 7%
- None of these

**Answer: (2) 8 %**

**Explanation:-**

**Given-**

Principal = Rs.500, Amount = Rs.583.20, Time = 2 years & Rate = ?

**Formula-**

** Amount = P (1 + R/100) ^{t}**

**Where, P = principal, R = rate & t = time.**

Then, 583.20 = 500(1 + R/100)^{2}

583.20/500 = (1 + R/100)^{2}

58320/50000 = (1 + R/100)^{2}

11664/10000 = [(100 + R)/100]^{2}

(108/100)^{2} = [(100 + R)/100]^{2}

Square root on both side,

108/100 = (100 + R)/100

108 = 100 + R

R = 108 – 100

R = 8 %

Hence, the answer is (2) 8 %.