Question 3

Simple interest on a certain sum at a certain rate for 2 years is Rs. 160 and compound interest on the same sum at the same rate and for the same period is Rs. 170. The rate of interest per annum is :

Solution

Simple interest remains same in every year.

=> Simple interest for 1 year = Rs. 80

Difference of C.I. and S.I. for two years = Rs.(170 - 160) = Rs. 10

=> Interest for 1 year on Rs. 80 = Rs. 10

=> $$\frac{80 \times r \times 1}{100} = 10$$

=> $$r = \frac{100}{8}$$ = 12.5%

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