Question
Find the rate of simple interest at which Rs. 5500
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 10% at compound interest compounded annually for same time period.Solution
Compound interest earned in 2 years = 5500 × [(1.10)^2 – 1] = 0.21 × 5500 = Rs. 1155 Let the rate of simple interest is R% According to question, (5500 × R × 2)/100 = 1155 110 × R = 1155 R = 10.5%
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