Question

The simple interest on a certain principal for 2 years is rs. 900 and the compound interest on the same principal for 2 years is Rs.945 . Find the rate of interest
​

Answer 1

Explanation :

Given that simple interest for 2 years is Rs.800

i.e., Simple interest for 1st year is Rs.400

and simple interest for 2nd year is also Rs.400

Compound interest for 1st year will be 400

and Compound interest for 2nd year will be 832 - 400 = 432

you can see that compound interest for 2nd year is more than simple interest for 2nd year by 432 - 400 = Rs.32

i.e, Rs. 32 is the interest obtained for Rs.400 for 1 year

Rate, R =

100

×

SI

PT

=

100

×

32

400

×

1

=

8

%

Rate, R = 100×SIPT=100×32400×1=8%

Difference between compound and simple interest for the 3rd year

= Simple Interest obtained for Rs.832

=

PRT

100

=

832

×

8

×

1

100

=

Rs. 66.56

=PRT100=832×8×1100=Rs. 66.56

Total difference between the compound and simple interest for 3 years

= 32 + 66.56 = Rs.98.56