Compound interest on Rs. 30,000 at 7% per annum amounts to Rs. 4347. Find the period in years_________?
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Answer: A. 2
Explanation
The compound interest formula links principal, interest rate, accumulated amount, and time period duration. Dividing the total amount by the principal gives the growth factor raised to the power of the number of years. Solving the exponential equation for the time period variable n confirms a duration of exactly two years. Compound interest growth follows an exponential curve based on the annual interest rate multiplier. The total accumulated amount equals the initial principal plus the total compound interest earned. Solving exponential equations for time often requires recognizing standard powers or using logarithms.
Financial institutions use compound interest formulas to determine loan durations and investment maturities. Savers calculate time horizons to understand how long capital must remain invested to reach financial goals. Mastering exponential equations is essential for solving advanced financial and demographic problems. Option B incorrectly suggests a fractional time period that fails to satisfy the exact compound growth factor. Option C overestimates the time period duration, yielding an accumulated amount higher than the given total. Option D proposes a four-year duration which would generate much higher compound interest earnings.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
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