On a certain sum of money, the simple interest for 2 years is Rs. 660 and the compound interest for the same period is Rs. 696.30. If the rate of interest is same in both the cases, then find the rate of interest.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 11%
For the first year, simple and compound interest are the same. In the second year, compound interest also earns interest on the first year’s interest, so for 2 years CI − SI = interest for one year on one year’s interest.
Simple interest for one year \(\displaystyle =\frac{660}{2}=\text{Rs. }330\)
CI − SI \(=696.30-660=\text{Rs. }36.30\), the interest earned on Rs. 330 in one year
Rate \(\displaystyle =\frac{36.30}{330}\times100=11\%\)