Rahul borrowed a certain sum from Dhawan at a certain rate of simple interest for 2 years. He lent this sum to Ramesh at the same rate of interest compounded annually for the same period. At the end of two years. he received Rs. 4200 as compound interest but paid Rs. 4000 only as simple interest. Find the rate of interest.
1). 12%
2). 25%
3). 35%
4). 10%
Let ‘x’ be the amount Rahul borrowed
∴ Interest paid by Rahul after 2 years = (x × 2 × r)
∴ According to the given condition,
⇒ 2xr = 4000
∴ xr = 2000 ----(1)
Interest to be paid by Ramesh
According to the given conditions,
$(x \times \left( {1 + 2r + {r^2} - 1} \right) = 4200)$
$(\therefore xr \times \left( {r + 2} \right) = 4200)$ ----(2)
From equations (1) and (2) we get.
(r + 2) = 4200/2000
∴ r = 0.1
∴ The rate of interest is 10%2. Find simple interest on Rs.5000/- at 12% p.a, for 2 years?