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      Question

      Simple interest and compound interest (compounded

      annually) earned on a sum at the end of 2 years at a certain rate of interest p.a. are Rs. 1200 and Rs. 1275 respectively. Find the rate of interest.
      A 10.5 Correct Answer Incorrect Answer
      B 14.5 Correct Answer Incorrect Answer
      C 12.5 Correct Answer Incorrect Answer
      D 11.5 Correct Answer Incorrect Answer
      E None of these Correct Answer Incorrect Answer

      Solution

      Simple interest for 1 year = 1200/2 = Rs. 600 Difference between compound Interest and Simple Interest for 2 years = 1275 - 1200 = Rs. 75 Desired rate = (75/600)Β Γ— Β 100 = 12.5%

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