Multiple choice

What is the rate of interest if simple interest earned on a certain sum in three years is Rs 7200 and compound interest earned in 2 years at the same rate is Rs 5160 ?

  1. 12.5%

  2. 12%

  3. 15%

  4. 18%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Let principal be P and rate be R%. Simple interest for 3 years: 3PR/100 = 7200, so PR = 240000. Compound interest for 2 years: P[(1 + R/100)² - 1] = 5160. Substituting P = 240000/R: (240000/R)[(1 + R/100)² - 1] = 5160. Testing R = 15%: (240000/15)[1.3225 - 1] = 16000 × 0.3225 = 5160. This matches exactly.

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