On a certain Principal if the Simple interest for two years is Rs 2400 and Compound interest for the two years is Rs 2544, what is the rate of Interest?
- A12 percent
- B6 percent
- C24 percent
- D18 percent
Solution & Step-by-step Explanation
Simple Interest (SI) for 2 years = Rs 2400.
Since SI is equal for every year, the SI for the 1st year =
2
2400
=Rs 1200.
Compound Interest (CI) for 2 years = Rs 2544.
The difference between CI and SI for 2 years is the interest earned on the first year's interest:
Difference=CI−SI=2544−2400=Rs 144
This Rs 144 is the interest generated on the first year's SI (Rs 1200) over 1 year.
Rate of Interest (R)=(
SI for 1st year
Difference
)×100%
R=(
1200
144
)×100%=
12
144
=12%
Since SI is equal for every year, the SI for the 1st year =
2
2400
=Rs 1200.
Compound Interest (CI) for 2 years = Rs 2544.
The difference between CI and SI for 2 years is the interest earned on the first year's interest:
Difference=CI−SI=2544−2400=Rs 144
This Rs 144 is the interest generated on the first year's SI (Rs 1200) over 1 year.
Rate of Interest (R)=(
SI for 1st year
Difference
)×100%
R=(
1200
144
)×100%=
12
144
=12%