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.
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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