Interest Q.18

18If at same rate of interest, in 2 years the simple interest is Rs 40 and compound interest is Rs 41, then what is the rate of interest

Option : B
Explanation : Simple interest for each year = 40/2 = Rs 20
Compound Interest for first year is Rs 20 and for second year = 41 – 20 = 21
Thus Rs 20 becomes Rs 21, thus rate of interest can be calculated
P = Rs 20, SI = Rs 1, T = 1 year
So R = SI × 100/P × T = 1 × 100/20 × 1 = 5%

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