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The interest on Rs. 750 for 2 years is the same as the true discount on Rs. 960 due 2 years hence. If the rate of interest is the same in both cases, it is:

Correct answer: B. 14%

  • A. 12%
  • B. 14%
  • C. 15%
  • D. 16%Standardized & Admissions Tests

Explanation

The simple interest on Rs. 750 for 2 years is Rs. 750 x 2r. The true discount on Rs. 960 due in 2 years is Rs. 960 x 2r ÷ (1 + 2r); equating them gives 1500r = 1920r ÷ (1 + 2r), so 1500(1 + 2r) = 1920 and r = 0.14 = 14% per year. The likely mistaken answer is 12%, which does not satisfy the equality after applying the true-discount denominator.

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