Difference between the compound interest and the simple interest accrued on an…

2023

Difference between the compound interest and the simple interest accrued on an amount of Rs 18000 in two year is rs 405 . What was the rate of interest ?

  1. A.

    14%

  2. B.

    16%

  3. C.

    12.5%

  4. D.

    15%

Attempted by 3 students.

Show answer & explanation

Correct answer: D

Answer: 15%

Reason:

  1. Compound amount for 2 years = P(1 + r/100)^2 = P + 2Pr/100 + P r^2/10000.

  2. Simple interest for 2 years = P + 2Pr/100.

  3. Difference between compound interest and simple interest = P r^2 / 10000.

  4. Substitute P = 18000 and set the difference equal to 405: 405 = 18000 * r^2 / 10000.

  5. Solve for r^2: r^2 = 405 * 10000 / 18000 = 225, so r = 15%.

  6. Therefore, the required rate of interest is 15%.

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