A sum of 1000 after 3 years at compound interest becomes a certain amount that is equal to the amount that is the result of a 3 year depreciation from 1728. Find the difference between the rates of CI and depreciation. (Given CI is 10% p.a.). (Approximately)

A sum of 1000 at 10% compound interest for 3 years becomes 1000 times 1.1 cubed, which is 1331. Equating this to a 3-year depreciation from 1728 gives the depreciation formula 1728 times (1 minus r over 100) cubed equals 1331. Taking the cube root of both sides reveals 12 times (1 minus r over 100) equals 11, making r equal to 8.33%. The difference between the compound interest rate of 10% and the depreciation rate of 8.33% is 1.67%, making the closest option approximately 2%.

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