compound interest

The difference between compound interest and simple interest on an amount of Rs. 15,000 for 2 years is Rs. 96. What is the rate of interest per annum?




Answer:

Let the rate of interest be R% per annum.


Compound interest: 

	15000 x		1 +	R		2	- 15000
				100

Simple Interest:

15000 x R x 2

100

Therefore,

	15000 x		1 +	R		2	- 15000		-		15000 x R x 2		= 96
				100							100

15000			1 +	R		2	- 1 -	2R		= 96
				100				100

15000		(100 + R)2 - 10000 - (200 x R)		= 96
		10000

R2 =		96 x 2		= 64
		3

 R = 8.

 Rate = 8%.