Question
The difference between compound interest and simple interest on a sum of Rs 8,000 for 2 years at the same rate is Rs 20. Find the rate of interest per annum.
Solution
Let rate = r% per annum. For 2 years, difference (CI − SI) = P × (r/100)² Given: 20 = 8000 × (r/100)² 20 = 8000 × r² / 10,000 20 = (4/5) r² r² = 20 × (5/4) = 25 r = 5% per annum.
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