WBCS.LIVE practice question

The compound interest on a certain sum for 2 years is Rs. 410/- and the simple interest for the same period is Rs. 400/-. The rate of interest is

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. 4%
  2. 5%
  3. 4.5%
  4. 5.1%

Correct answer and explanation

Correct answer: 5%

Explanation: ✅ Correct Answer: B. 5% 📚 Explanation: The difference between compound interest and simple interest for two years is Rs 410 - 400 = Rs 10. This difference is the interest earned on the first year’s simple interest. Simple interest for one year is 400 / 2 = Rs 200. To find the rate, we calculate what percentage 10 is of 200, which results in exactly 5 percent.