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On a certain Principal if the Simple interest for two years is Rs. 2400 and Compound interest for the two years is Rs. 2544, what is the rate of Interest?
- A12 percent
- B6 percent
- C24 percent
- D18 percent
Answer not set
Discussion 1
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CCommunity
The formula for annual compound interest, including principal sum, is: $(CI\; = \;P{\left( {1\; + \;\frac{r}{{100\; \times \;n}}} \right)^{nt}} - P)$
Where:
CI = Compound InterestP = the principal investment amount (the initial deposit or loan amount)r = the annual interest rate (decimal)n = the number of times that interest is compounded per yeart = the number of years the money is invested or borrowed for
Here n = 2
Let the principal be P
SI = (P × r × 2)/100 = 2400
Pr = 120000
CI = P(1 + r/100)2 – P = 2544
P(1 + r2/10000 + 2r/100) – P = 2544
(Pr) × r/10000 + Pr/50 = 2544
120000r/10000 + 2400 = 2544
r = 12%
Where:
CI = Compound InterestP = the principal investment amount (the initial deposit or loan amount)r = the annual interest rate (decimal)n = the number of times that interest is compounded per yeart = the number of years the money is invested or borrowed for
Here n = 2
Let the principal be P
SI = (P × r × 2)/100 = 2400
Pr = 120000
CI = P(1 + r/100)2 – P = 2544
P(1 + r2/10000 + 2r/100) – P = 2544
(Pr) × r/10000 + Pr/50 = 2544
120000r/10000 + 2400 = 2544
r = 12%