Multiple choice

The difference between simple interest for 3 years and compound interest for 2 years on Rs. 4000 at the same rate is Rs. 190. What is the rate of interest ?

  1. 8%

  2. 12%

  3. 15%

  4. 25%

  5. None of these
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

For 3 years simple interest = 4000 × R × 3/100 = 120R. For 2 years compound interest = 4000[(1+R/100)² - 1] = 80R + 0.4R². The difference |120R - (80R + 0.4R²)| = 190 gives 0.4R² - 40R + 190 = 0. Solving: R = [100 ± √8100]/2 = [100 ± 90]/2. R = 5% or 95%. Only R=5% is practically valid, which is not in options A-D, making E correct.

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