Question

If the compound interest on a certain sum for $2$ years is Rs $21$. What could be the simple interest?

• A. Rs $20$
• B. Rs $16$
• C. Rs $18$
• D. Rs $20.50$

Answer 1

Answer: (A)

Rs $20$

Compound interest at rate $r$ for $2$ years accumulates to: $(1+r{)}^2=1.21$

$\Rightarrow$ $r=10\%$.

At $r=10\%$,

Simple interest in $2$ years accumulates to $2\times \left(10\%\right)=0.20$,

$\therefore$ Simple Interest $=$ Rs $20$