Multiple choice

Simple interest on a certain sum for 2 years is 800 and compound interest for the same sum for the same time is 840, then find the annual rate of interest?

  1. 10%

  2. 20%

  3. 15%

  4. 25%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Let rate = r%. SI for 2 years = 2r% of P = 800. CI for 2 years = P[(1 + r/100)² - 1] = P[2r/100 + r²/10000] = 800 + Pr²/10000 = 840. Difference = 40 = Pr²/10000. From SI: P = 80000/2r = 40000/r. Substituting: (40000/r) × r²/10000 = 40, giving r = 10%. Verify: SI = 400, CI = 440, difference = 40 ✓

Keep practicing — related questions