The simple interest on a certain sum computes to ₹ 500 in two years and the…
2013
The simple interest on a certain sum computes to ₹ 500 in two years and the compound interest on the same sum at the same rate and for the same time computes to ₹ 520. The rate of interest is
- A.
5 %
- B.
8 %
- C.
10 %
- D.
12 %
Attempted by 5 students.
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Correct answer: B
First, calculate the Simple Interest (SI) for one year.
Since SI for 2 years is ₹500, SI for 1 year is ₹250.
Next, find the difference between Compound Interest (CI) and SI for 2 years: ₹520 - ₹500 = ₹20.
This difference represents the interest earned on the first year's SI amount (₹250).
Finally, calculate the rate: Rate = (Difference / SI for 1 year) × 100 = (20 / 250) × 100 = 8%.