A sum of Rs. 7,500 is invested in a scheme offering r% compound interest for 2 years. Find the value of 'r' if the difference in the simple interest and compound interest for the same amount at the same rate of interest after 2 years is Rs. 108.
Show answer & explanation
Correct answer: C
Explanation
Given:
Principal = ₹7500
Time = 2 years
Difference between simple interest and compound interest = ₹108
By formula:
Difference for 2 years = P × (r/100)²
108 = 7500 × (r/100)²
(r/100)² = 108 / 7500
(r/100)² = 0.0144
r/100 = 0.12
r = 12%