certain sum earns simple interest of Rs. 800 in 2 years at a certain rate of interest. If the samesum earns compound interest of Rs. 845 in the same period of 2 years, What must be the rate ofinterest?
A)5% p.a.
B)7.5% p.a.
C)10% p.a.
D)12.5% p.a.

Question

Quizplus · Accepted Answer

The difference in interest (compound interest - simple interest) over 2 years is Rs. 45, which is the interest on the first year's interest. This means the rate of interest is (45/800)*100 = 5.625%, which is approximately 5% per annum.

Certain Sum Earns Simple Interest of Rs