The difference between the compound interest and simple interest on a sum of ₹2,500 for 2 years is ₹100. Find the rate of interest per annum, if the nominal rate of interest per annum is the same for both simple and compound interest, and in the case of compound interest, the interest is compounded annually.
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. 20%
The difference between compound interest and simple interest for 2 years = Principal × {Rate/100}2
⇒ 100 = 2500 × {Rate2/1002}
⇒ 10000/25 = rate2
⇒ Rate2 = 400
Thus, rate = 20%