On a sum of money, when invested for 2 years, compound interest and simple interest are ₹300 and ₹250, respectively. For both simple and compound interests the rate of interest per annum is the same, and for compound interest, interest is compounded annually. Find the rate of interest per annum.
Answer & explanation
Correct answer: option 3
Simple interest of 2 years = Rs. 250
Compound interest of 2 years = Rs. 300
Difference b/w CI and SI of 2 years = 300 - 250 = 50
Simple interest of 2 years = \(\frac{250}{2}\) = Rs. 125
Rate of interest = \(\frac{50}{125}\) × 100%
= 40%