Question

The difference between CI and SI on the same sum of ₹ 8000 for 2 years is ₹ 20. Find the rate of interest.

Answer 1

Let the rate of interest be R%.

Compound interest – Simple interest = `P(R/100)^2`, where P is the principal and R is the rate of interest

Given, the difference between CI and SI on the same sum of ₹ 8000 for 2 years is ₹ 20.

∴ `8000 (R/100)^2 = 20`

⇒ `8000 (R^2/(100 xx 100)) = 20`

⇒ `4(R^2/5) = 20`

⇒ `R^2 = (20 xx 5)/4`

⇒ `R = sqrt(25)`

⇒ R = 5

Hence, the required rate of interest is 5%.