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      Question

      Find the rate of simple interest at which Rs. 6500

      should be invested for 2 years so that the interest earned will be same as the interest received when the same amount is invested at 20% at compound interest compounded annually for same time period.
      A 23% Correct Answer Incorrect Answer
      B 22% Correct Answer Incorrect Answer
      C 25% Correct Answer Incorrect Answer
      D 24% Correct Answer Incorrect Answer
      E None of these Correct Answer Incorrect Answer

      Solution

      Compound interest earned in 2 years = 6500 × [(1.20)^2 – 1] = 0.44 × 6500 = Rs. 2860 Let the rate of simple interest is R% According to question, (6500 × R × 2)/100 = 2860 130 × R = 2860 R = 22%

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