Multiple choice

A sum of Rs. 7500 amounts to Rs. 9075 at 10% p.a, interest being compounded yearly in a certain time. The simple interest (in Rs.) on the same sum for the same time and the same rate is:

  1. 1500

  2. 1530

  3. 1400

  4. 1485
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A Correct answer
Explanation

First, find the time period using compound interest: 7500(1.1)^t = 9075, so (1.1)^t = 1.21, giving t = 2 years. Then calculate simple interest for the same period: SI = P × R × T = 7500 × 0.1 × 2 = Rs. 1500. The key is recognizing that after 2 years at 10%, the compound amount factor is 1.21 (1.1²).

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