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10. The difference between the compound interest and the simple interest accrued on an amount of Rs. 18,000 in 2 years was Rs. 405. What was the rate of interest p.c.p.a. ?

A. 10%

B. 12%

C. 13%

D. 15%

Correct Answer :

D. 15%


Let the rate be R% p.a. then,


[ 18000 ( 1 + ( R / 100 )2 ) - 18000 ] - ((18000 * R * 2) / 100 ) = 405


18000 [ ( 100 + (R / 100 )2 / 10000) - 1 - (2R / 100 ) ] = 405


18000[( (100 + R ) 2 - 10000 - 200R) / 10000 ] = 405


9R2 / 5 = 405 , R2 =((405 * 5 ) / 9) = 225


R = 15.


Rate = 15%.