The difference between the compound interest, compounding annually and the simple interest accrued on an amount of Rs. 18,000 in 2 years was Rs. 720. What was the rate of interest per annum? 

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SSC GD Constable (2022) Official Paper (Held On : 30 Jan 2023 Shift 3)
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  1. 25%
  2. 15%
  3. 20%
  4. 10%

Answer (Detailed Solution Below)

Option 3 : 20%
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Detailed Solution

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Given:

Principal (P) = Rs. 18,000

Time (T) = 2 years

Difference between Compound Interest and Simple Interest = Rs. 720

Concept:

The difference between CI and SI for two years = P × R²/100.

Solution:

⇒ R2 = Difference between CI and SI × 1002 / P

⇒ R2 = 720 × 10000/18000

⇒ R2 = 400

⇒ Rate of Interest (R) = √400 = 20%

Therefore, the rate of interest per annum is 20%.

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