Question

The simple and compound interest that can be earned in two years at the same rate is Rs 1500 and Rs 1575 respectively. What is the rate (% per annum) of interest?

A) 8 B) 10 C) 12 D) 5

Answer 1

Answer:

The simple interest after 2 years = 1500. Hence the simple interest in one year = 750.

Assuming the compounding happens every year, the compound interest at the end of one year will be still Rs. 750 only. In the second year, the interest earned is 1575 - 750 = 1575 - 750 = 825 i.e. 75 rupees more than the Simple interest. This is due to the interest earned on the interest of 750. Hence 75 rupees on an amount of 750. Hence interest % = (75/750)*100 = 10 .

so that 10 is your right answer .