The difference between compound interest and simple interest on ₹36,000 for 2…
2019
The difference between compound interest and simple interest on ₹36,000 for 2 years at R% per annum is ₹518.40. What is the value of R?
- A.
10%
- B.
12%
- C.
8%
- D.
14%
Attempted by 50 students.
Show answer & explanation
Correct answer: B
Derivation: For 2 years, simple interest = P × R × 2 / 100. Compound interest for 2 years = P[(1 + R/100)^2 − 1] = P[2R/100 + (R/100)^2]. The difference (CI − SI) = P × (R/100)^2.
Now substitute P = 36000 and the given difference = ₹518.40:
36000 × (R/100)^2 = 518.40
(R/100)^2 = 518.40 ÷ 36000 = 0.0144
Take the square root (use the positive root since rate cannot be negative): R/100 = 0.12
Therefore R = 0.12 × 100 = 12%
Answer: 12%.