The simple interest on a sum of money for 3 years is ₹240 and the compound interest on the same sum, at the same rate for 2 years is ₹170. The rate of interest is:
Solution
✅ Correct Option: 4
Simple interest is the same amount every year. $\text{SI for 1 year}=\dfrac{240}{3}=₹80$ $\text{SI for 2 years}=₹160$ Compound interest for 2 years is ₹170. The extra $170-160=₹10$ is nothing but the interest earned on the first year's interest of ₹80. So, $10=\dfrac{r}{100}\times80$ $\Rightarrow r=\dfrac{10\times100}{80}$ $\Rightarrow r=12.5$ $\text{Rate}=12\dfrac{1}{2}\%$