Multiple choice

A sum of money is invested at C.I. payable annually. The amounts of interest in two successive years are Rs. 2,700 and Rs. 2,880. Find the rate of interest.

  1. $2\frac{1}{3}\%$
  2. $6\frac{2}{3}\%$
  3. $7\frac{5}{3}\%$
  4. $11\frac{7}{3}\%$
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B Correct answer
Explanation

The difference in interest between two years is the interest on the previous year's interest. 2880 - 2700 = 180. Rate = (180 / 2700) * 100 = 18/270 * 100 = 2/30 * 100 = 20/3 = 6 2/3%.

AI explanation

In compound interest, the interest for the second year equals the first year's interest plus interest on that first year's interest. The absolute difference between the two successive interests is 2880 minus 2700, which equals Rs. 180. The rate of interest is this difference divided by the first year's interest, giving 180 divided by 2700, which equals 0.0666 or $6\frac{2}{3}\%$.

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