Multiple choice

The difference between compound and simple interest on an amount of Rs. 15000 after 2 years is Rs 96. What is the rate of interest per annum ?

  1. 8%

  2. 10%

  3. 14%

  4. 15%

  5. 4%
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A Correct answer
Explanation

Use the formula for difference between CI and SI for 2 years: D = P(r/100)². Here D = 96, P = 15000. So 96 = 15000(r/100)². This gives 96 = 15000 × r²/10000, or r² = 96 × 10000/15000 = 64. Therefore r = 8%. To verify: SI = 15000 × 8 × 2/100 = 2400. CI = 15000(1.08)² - 15000 = 17496 - 15000 = 2496. Difference = 2496 - 2400 = 96.

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