The simple interest on a sum of Rs 1550 for 2 yrs is Rs 20 more than the simple interest on Rs 1450 for the same duration (the rate of interest is the same in both the cases). Find the rate of interest.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 10%
Simple interest \(\displaystyle =\frac{P\times R\times T}{100}\). The rate and the time are the same for both sums, so the extra Rs 20 is the interest on the extra principal alone.
Extra principal \(=1550-1450=\) Rs 100
The interest on this Rs 100 for 2 years is Rs 20, so for 1 year it is \(20\div2=\) Rs 10
The rate is the interest on Rs 100 for 1 year, so \(R=10\%\)