Question

If the difference between CI and SI on the sum of money for 2years is 1percent Of the sum of money. Find the rate of interest.

Answer 1

Firstly CI is compound interest

SI is simple intérêts

We are asked to solve for the rate r which in two years has a future value (1 + r )^2 and has we calculated the future value using Simple interest method it be 1% less

Therefore CI - SI = 0.01

So you can solve (1+r)^2 - (1 + 2 r ) = 0.01

Expand to 1+ 2r + r^2 -1 -2r = 0.01

r^2 = 0.01 therefore r = 0.01)^1/2

r = 0.10. Or 10%

hope it help friend