The compound interest on a certain sum at the end of two years is Rs. 408. The simple interest on the same sum for the same time is Rs. 400. The rate of interest per annum is:
Show answer & explanation
Correct answer: D
Explanation
The correct answer is Option 4 i.e 4%
As we know, the interest for 1 year in both S.I and C.I is same and interest in the case of S.I is the same for every year.
So, the first-year interest must have been 200 in case of both S.I and C.I
For the second year, interest in the case of C.I = 408 - 200 = 208
The difference in the interest for 2nd year in C.I and S.I is 208 - 200 = 8
So, the rate of interest = (8 / 200) × 100 = 4%