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On a sum of money, the simple interest for 2 years is Rs. 320, while the compound interest is Rs. 340, the rate of interest being the same in both the cases. The rate of interest is

A.

15%

B.

14.25%

C.

12.5%

D.

10.5%

Answer with explanation

Answer: Option CExplanation

Simple interest for 2 years is Rs. 320

=> Simple interest for first year = 320/2 = 160

=> Similarly, simple interest for second year is also 160

Compound Interest for first year = 160

Compound Interest for second year = 340-160 = 180

we can see that compound Interest for second year is more than

simple interest for second year by 180-160 = 20

i.e., Rs.20 is the simple interest on Rs.160 for 1 year

R=100×SIPT=100×20160×1=12.5%R=100×SIPT=100×20160×1=12.5%

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