Answer:
5%
Explanation:
The compound interest formula is A = P (1 + r/n)^nt where A is the future value of the investment, P is the principal investment amount, r is the annual interest rate (decimal), n is the number of times the interest is compounded per year and t is the time in years 1.
In your case, we have P = Rs. 8000, A = Rs. 8820 (Rs. 820 + Rs. 8000), n = 1 (compounded yearly) and t = 2 years 2.
Substituting these values in the above formula we get:
8820 = 8000(1 + r/1)^(1*2)
Solving for r we get:
r = ((8820/8000)^(1/2) - 1)*100
r ≈ 5%
Therefore, the rate of compound interest is approximately 5%