A sum is being lent at 20 % per annum compound interest.what is the ratio of increase in amount of 4th year to 5th year?

Q: A sum is being lent at 20 % per annum compound interest.what is the ratio of increase in amount of 4th year to 5th year?

P 1 + r 100 4 P 1 + r 100 5 = 1 1 + r 100 = 100 100 + r = 100 120 = 5 6

4:5
5:4
5:6
can't be determined

Correct Answer: 5:6

Explanation:

$\frac{P 1 + \frac{r}{100} 4}{P 1 + \frac{r}{100} 5} = \frac{1}{1 + \frac{r}{100}} = \frac{100}{100 + r} = \frac{100}{120} = \frac{5}{6}$

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