The difference between the compound interest and the simple interest for 2 years on a sum of money is Rs. 60. If the simple interest for 2 years is Rs. 1440, what is the rate of interest ?
$4rac{1}{6}$ %
$6rac{1}{4}$ %
8%
$8rac{1}{3}$ %
Answer is Wrong!
Answer is Right!
This question was previously asked in
UPSC CAPF – 2017
Simple Interest (SI) for 2 years = Rs. 1440.
SI for 1 year = 1440 / 2 = Rs. 720.
We know that SI for 1 year = (P * R * 1) / 100. So, PR/100 = 720.
The difference between Compound Interest (CI) and Simple Interest (SI) for 2 years is the interest earned on the first year’s simple interest.
Difference (CI – SI) for 2 years = Interest on SI of 1st year.
Given difference = Rs. 60.
Interest on SI of 1st year = (SI for 1st year * R * 1) / 100.
So, 60 = (720 * R) / 100.
6000 = 720 * R.
R = 6000 / 720 = 600 / 72 = 100 / 12 = 25 / 3.
25/3 % = $8\frac{1}{3}$ %.
Given difference = 60. So, 60 = 720 * (R/100).
R/100 = 60/720 = 1/12.
R = 100/12 = 25/3 = $8\frac{1}{3}$ %. Both methods yield the same result.