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    Question

    Find the rate of simple interest at which Rs. 5000

    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 20% Correct Answer Incorrect Answer
    B 25% Correct Answer Incorrect Answer
    C 22% Correct Answer Incorrect Answer
    D 27% Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    Compound interest earned in 2 years = 5000 × [(1.2)^2 – 1] = 0.44 × 5000 = Rs. 2200 Let the rate of simple interest is R% According to question, (5000 × R × 2)/100 = 2200 100 × R = 2200 R = 22%

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