Question

The simple interest on a sum of money for 3 years is Rs. 270 and the compound interest on the same sum, at the same rate for 2 years is Rs. 200. The rate of interest i

Answer 1

Simple interest = Rs 270

Number of years = 3

Find the interest for 1 year:

3 years = Rs 270

1 year = 270 ÷ 3

          = Rs 90

Find the first and second year compound interest:

The compound interest for the first year is the same as the simple interest for the first year.

Compound interest for 2 years = Rs 200

Compound interest for 1st year = Rs 90

Compound interest for 2nd year = 200 - 90

                                                      = Rs 110

The difference between the first year CI and second year CI is the interest received on the first years CI:

Interest received on the Rs 90 = 110 - 90

                                                    = Rs 20

Find the interest rate:

Interest rate = 20/90 x 100 = 22.2%

Answer: The interest is at 22.2%