Question
The simple interest on a sum for 2 years at r% per annum is Rs 500 and the compound interest (compounded annually) on the same sum for 2 years at the same rate is Rs 525. Find r.
Solution
Given: SI = 500, CI = 525 (for 2 years) So, CI − SI = 25 For 2 years: CI − SI = P*(r/100)^2 ...(1) Also, SI for 2 years = Pr2/100 = Pr/50 = 500 So, Pr = 25000 ...(2) From (1): 25 = Pr^2/10000 => Pr^2 = 250000 ...(3) Divide (3) by (2): (Pr^2)/(Pr) = 250000/25000 r = 10
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