The difference between the compound interest and simple interest on a sum of Rs2 500 for 2 years is ...........

Quantitative Aptitude (MTS) Compound Interest

The difference between the compound interest and simple interest on a sum of Rs2,500 for 2 years is Rs100. Find the rare 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.

This questions was previously asked in

SSC MTS 19th July 2022 Shift-2

40%

25%

20%

12%

- Simple Interest (SI) and Compound Interest (CI) are calculated on the principal amount.

- Both SI and CI are based on the same nominal rate and for 2 years.

- Formula for SI = Principal × Rate × Time / 100.

- Formula for CI = Principal × (1 + Rate/100)^Time - Principal.

- Difference between CI and SI given is Rs100.

- Let's denote the rate of interest as R.

\text{CI - SI} = 2500 \times \left(1 + \frac{R}{100}\right)^2 - 2500 - \left(2500 \times \frac{R \times 2}{100}\right) = 100

- Solve the above equation to find R.

- After calculation, R is found to be 20%.

- Therefore, the correct option is:

- Option 3: 20%

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