Amit borrowed a sum of ₹25,000 on simple interest. Bhola borrowed the same amount on compound interest(interest compounded yearly). At the end of 2 years, Bhola had to pay ₹160 more interest than Amit. The rate of interest charged per annum is:
Answer & explanation
Correct answer: option 3
We know ,
Difference b/w CI and SI for 2 years = \(\frac{P × R² }{100× 100 }\)
160 = \(\frac{25000 × R² }{100× 100 }\)
1600 = 25 × R²
R = 8%