The difference in compound interest, under annual compounding, and simple interest on a certain sum at the same rate of interest in 2 years is 144% of the sum. Find the rate of interest per annum.

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SSC GD Constable (2022) Official Paper (Held On : 16 Jan 2023 Shift 1)
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  1. 15%
  2. 100%
  3. 120%
  4. 20%

Answer (Detailed Solution Below)

Option 3 : 120%
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Detailed Solution

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Given data:

The difference between Compound Interest (CI) and Simple Interest (SI) for 2 years = 144% of the principal (P)

Concept or formula:

Difference between CI and SI for 2 years is given by P × (r ÷ 100)2

Calculation:

Substitute the given values in the formula

⇒ 144% P = P × (r ÷ 100)2 

⇒ (144/100)P = P × (R/100)2

Taking square root on both sides,

⇒ 12/10 = R/100

⇒ R = 120

Hence, the rate of interest per annum is 120%.

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