Multiple choice

Simple interest on a principal of 2 years is Rs 108.80 and compound interest on same principal for same time period and rate of interest is Rs 115.60. Find rate of interest.

  1. 12.5 %

  2. 8%

  3. 10 %

  4. 15%

  5. None of these
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A Correct answer
Explanation

For 2 years, difference between CI and SI = P × (r/100)². Given: 115.60 - 108.80 = P × (r/100)², so 6.80 = P × (r/100)². Also, SI = P × r × 2 / 100 = 108.80, so P × r = 5440. Dividing the equations: (5440/r) × (r/100)² = 6.80, which gives r = 12.5%.

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