Quantitative Aptitude • Simple & Compound InterestHard
On a certain sum, the simple interest for 2 years is ₹900 and the compound interest for 2 years at the same rate is ₹918. What is the rate of interest?
A. 8%
B. 4%✓ Correct Answer
C. 9%
D. 2%
💡 Solution & Explanation
Simple interest for one year = ₹900 ÷ 2 = ₹450. Compound interest is higher only because, in year 2, interest is also earned on year 1's interest: ₹918 − ₹900 = ₹18. That extra is the year-2 interest on ₹450, so the rate = 18 ÷ 450 × 100 = 4%. The principal is then ₹450 × 100 ÷ 4 = ₹11,250.
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