Question

Find the rate of interest if the difference between C.I and S.I on ₹ 8000 compounded annually for 2 years is ₹ 20.

Answer 1

Principal (P) = ₹ 8000

Time period (n) = 2 years

Rate of interest (r) = ?

Difference between C.I and S.I is given by the formula

C.I − S.I = `"P"("r"/100)^2`

Difference between C.I and S.I is given as ₹ 20

∴ 20 = `8000 xx ("r"/100)^2`

∴ 20 = `8000 xx (r^2)/(100^2)`

∴ r² = `(20 xx 100 xx 100)/(8000)`

∴ r² = 5²

r = 5%