Multiple choice

The difference between compound interest and simple interest accrued on Rs. 12,000 lent at rate of r% per annum for 2 years was Rs. 30. Find the rate of interest.

  1. 8%

  2. 5%

  3. 7%

  4. 9%

  5. 10%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Difference between CI and SI for 2 years = P * (r/100)^2. 30 = 12000 * (r/100)^2. 30 / 12000 = (r/100)^2. 1/400 = (r/100)^2. 1/20 = r/100. r = 5%.

AI explanation

The difference between compound interest and simple interest for two years can be calculated using the formula Principal multiplied by Rate squared divided by 10000. Substituting the given values results in 30 equals 12000 multiplied by Rate squared divided by 10000, which simplifies to Rate squared equals 25. Taking the positive square root gives the rate of interest as 5 percent.

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