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The difference between compound interest and simple interest on an amount of Rs. 15,000 for 2 years is Rs. 96. What is the rate of interest per annum?

Correct answer: A. 8

  • A. 8
  • B. 10
  • C. 12
  • D. Cannot be determined

Explanation

For 2 years, the difference between compound interest and simple interest is P x (r/100)^2. Thus, 96 Rs = 15,000 Rs x (r/100)^2, so r^2 = 64 and r = 8%. Students may choose 10% by using the common rate without calculating the square relationship.

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