At a certain rate of interest per annum, the difference between the compound interest, compounding annually, and the simple interest on ₹5,000 for 2 years is ₹72. The rate of interest per year is:
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 12%.
Given that
Principal = ₹5,000
C.I. - S.I. = ₹72
Time = 2 years
Formula used
C.I. - S.I. = P (R/100)2
Calculation
⇒ 72 = 5000 (R/100)2
⇒ 72 = 0.5 × R2
⇒ R2 = 72/0.5
⇒ R2 = 720/5 = 144
R = 12 %