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Question
At what rate percent compound interest, does a sum of money become 1.44 times of itself in 2 years?
Solution
Let Principal = Rs. y
Then Amount = Rs 1.44y
n = 2 years
∴ Amount = `"P"( 1 + "r"/100 )^n`
⇒ `1.44y = y( 1 + r/100)^2`
⇒ `[1.44y]/y = (1 + r/100)^2`
⇒ `36/25 = (1 + r/100)^2`
⇒ `(6/5 )^2 = (1 + r/100)^2`
On comparing,
`6/5 = 1 + r/100`
On solving, we get
r = 20%
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