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      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.
      A 9% Correct Answer Incorrect Answer
      B 2% Correct Answer Incorrect Answer
      C 5% Correct Answer Incorrect Answer
      D 11% Correct Answer Incorrect Answer

      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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