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The difference between compound interest and simple interest at the same rate on Rs 5000 for 2 years is Rs 72. The rate of interest per annum is:___________?

Correct answer: D. 12%

  • A. 6%
  • B. 8%
  • C. 10%
  • D. 12%

Explanation

For 2 years, the difference is P x (r/100)^2. Hence, 72 Rs = 5,000 Rs x (r/100)^2, giving r^2 = 144 and r = 12%. Students may choose 10% by applying the difference formula incorrectly as a first-power percentage.

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Percentages express a quantity as parts per hundred and support calculations involving increases, decreases, discounts, commissions, taxes, and successive changes. Questions require distinguishing percentage change from percentage points and identifying the original value when a final value and its percentage change are given.

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