Multiple choice

The compound interest on a certain sum for 2 years is Rs. 4100 and the simple interest is Rs. 4000. Then the rate of interest is-

  1. 4%

  2. 5%

  3. 6%

  4. 8%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The difference between compound interest and simple interest for 2 years is the interest on the first year's interest. CI - SI = Rs. 4100 - Rs. 4000 = Rs. 100. This Rs. 100 is the interest on the first year's simple interest. So if first year SI = Rs. 2000 (half of Rs. 4000), then Rs. 100 is interest on Rs. 2000 for 1 year. Therefore Rate = (100/2000) × 100 = 5%.

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